As investors await the U.S. inflation report, gold prices decline for the third consecutive session, settling at the lowest level in two weeks

As investors awaited the release of the July U.S. consumer-price inflation report in the wake of data from China indicating that deflation has re-emerged in the world's second-largest economy, gold futures fell for a third day on Wednesday, closing at the lowest level in nearly two weeks.

Price movement

Gold futures for December delivery GC00, -0.08% GCZ23, -0.08% settled at $1,950.60 per ounce, down $9.30, or 0.5%. According to Dow Jones Market Data, this was the lowest settlement for the most active gold since July 27 when it closed at 1945.70.

Futures contracts for silver with September delivery SI00, 0.00% SIU23, 0.00% settled at $22.73 per ounce, down 8 cents, or 0.3%.

Palladium futures for September delivery PA00, 0.32% PAU23, 0.32% increased $13.40, or 1.1%, to $1,231.50 per ounce, whereas platinum futures for October delivery PL00, 0.40% PLV23, 0.40% decreased $11.50, or 1.3%, to $892.70 per ounce.

Copper futures for September delivery HG00, 0.29% HGU23, 0.29% closed at $3.78 per pound, up 2 cents, or 0.5%.

Market forces

Thursday's release of the next set of U.S. inflation data could shed some light on whether or not the Federal Reserve will raise interest rates again in September.

Economists surveyed by the Wall Street Journal anticipate a 0.2% increase in consumer prices in July, the same as in June. The June data were weaker than anticipated, giving economists optimism that the Fed could end its campaign of interest rate hikes sooner.

"Tomorrow brings the latest U.S. inflation data, which will be an important reference point for the Federal Reserve when the committee meets next month to decide whether to keep raising interest rates or if inflation is now sufficiently on a downward trajectory for the US central bank to be able to leave rates unchanged," said Rupert Rowling, market analyst at Kinesis money, in an email commentary.

China's most recent economic data, released on Wednesday, revealed a decline in consumer prices in July, the first decrease in two years, raising the specter of deflation and further complicating China's post-COVID-19 reopening recovery.

In the past week, gold prices have declined as the U.S. dollar and global bond yields, especially Treasury yields, have risen. The ICE U.S. Dollar Index DXY decreased by less than 0.1% to 102.47, but is up 0.4% for the week so far.

The yield on 10-year Treasury notes BX:TMUBMUSD10Y decreased by 1 basis point to 4.01%, whereas the yield on 2-year Treasury notes BX:TMUBMUSD02Y increased by 6 basis points to 4.80%.