(RTTNews) – Gold prices surged early in the session on Wednesday but have given back ground over the course of the trading day.
After jumping by as much as 1.7 percent to a high of $4,251.10 an ounce, gold for December was last seen trading at $4,181.20, up just $1.50 or less than a tenth of a percent.
The price of gold initially benefitted from a positive reaction to a closely watched report on consumer price inflation in the U.S.
The report from the Commerce Department showed consumer prices rose by less than expected on a monthly basis in August, while the annual rate of price growth also came in below estimates.
While the annual rate of consumer price growth remains well above the Federal Reserve’s 2 percent target, traders may have felt the data reduced the likelihood the central bank will raise interest rates next month.
According to CME Group’s FedWatch Tool, the chances the Fed will raise rates by a quarter point have fallen to 37.1 percent from 50.9 percent on Tuesday.
Buying interest waned over the course of the session, however, as treasury yields have once again turned higher despite the tamer-than-expected inflation data.
The yield on the benchmark ten-year note has jumped to its highest levels since 2002, as some analysts have suggested the inflation data persuade the Fed to leave rates unchanged in light of signs of continued strength in the labor market.
A report released by payroll processor ADP this morning showed private sector employment in the U.S. jumped by more than expected in the month of September.
ADP said private sector employment shot up by 90,000 jobs in September after rising by a downwardly revised 36,000 jobs in August.
Economists had expected private sector employment to increase by 70,000 jobs compared to the addition of 38,000 jobs originally reported for the previous month.
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