Spot gold traded largely flat during European hours on Wednesday as investors weighed conflicting signals surrounding the U.S.-Israel conflict with Iran, while keeping a close eye on energy market disruptions and the possibility of a de-escalation in hostilities.
Market participants are also awaiting February consumer inflation figures from the United States, which could offer fresh insight into the outlook for the world’s largest economy. However, the data is unlikely to capture the recent surge in energy prices linked to the Iran conflict.
Spot gold was little changed at $5,194.22 per ounce by 08:17 ET (12:17 GMT), while gold futures slipped 0.8% to $5,202.10 per ounce. The precious metal has experienced sharp volatility in recent weeks, retreating from a record high near $5,600 per ounce reached in late January.
Uncertainty surrounding the situation in Iran has contributed to volatile trading this week. U.S. President Donald Trump said late Monday that the war could end soon, but military exchanges between the United States, Israel and Iran continued into early Wednesday, marking the twelfth straight day of conflict.
Investors are concerned that a spike in energy-driven inflation could prompt central banks to adopt a more hawkish policy stance. Such a shift could strengthen the U.S. dollar, making gold more expensive for buyers using other currencies.
U.S. CPI data in focus
Markets are also awaiting the release of U.S. consumer price index data for February later on Wednesday, which could provide additional guidance on inflation trends and the future path of interest rates.
Economists expect headline CPI to remain unchanged at 2.4% on an annual basis, while core inflation—which excludes food and energy—is projected to hold steady at 2.5%.
Although the report will likely precede the impact of the recent jump in energy prices linked to the Iran conflict, it will still be closely monitored for signals about consumer demand and the broader health of the U.S. economy.
The inflation data follows a key employment report for February that came in weaker than expected, raising questions about whether economic growth in the United States may be slowing.