Gold slips as investors await US inflation data and Fed signals
Rising oil prices and stronger expectations of a US interest-rate hike kept pressure on gold ahead of key inflation reports due later this week
Dubai: Gold prices edged lower on Tuesday as investors positioned themselves ahead of key US inflation data that could influence the Federal Reserve's next interest-rate decision.
Spot gold fell 0.3% to US$4,390.50 per ounce by 0816 GMT, after rising as high as US$4,442.70 earlier in the session. US gold futures for December delivery declined 0.9% to US$4,435.00 per ounce.
Nikos Tzabouras, Senior Market Analyst at Tradu.com, said gold was trading cautiously as investors weighed expectations of higher US interest rates against a softer US dollar.
"Higher oil prices stoke inflation risks and expectations for Fed rate hikes, putting the precious metal under pressure," he said.
Oil prices extended gains to multi-week highs after reports of attacks by Yemen's Iran-backed Houthis on energy facilities and cities in Saudi Arabia.
Gold had already come under pressure on Friday following stronger-than-expected US labour market data. The figures showed that US job growth accelerated sharply in August, while the unemployment rate remained steady at 4.1%.
The data strengthened expectations that the Federal Reserve could raise interest rates at its next policy meeting. According to CME's FedWatch Tool, markets are now pricing in roughly a 60% chance of a rate increase, compared with about 50% before the jobs report.
Although gold is traditionally viewed as a hedge against inflation, higher interest rates tend to reduce the appeal of non-yielding assets such as bullion.
A weaker US dollar helped limit losses by making dollar-denominated gold more affordable for overseas buyers.
Investors are now focused on US Producer Price Index (PPI) data due on Thursday and Consumer Price Index (CPI) data scheduled for Friday for further indications of the Federal Reserve's policy direction ahead of next week's Federal Open Market Committee (FOMC) meeting.
Among other precious metals, silver fell 0.5% to US$65.76 per ounce, platinum slipped 0.2% to US$1,821.36, and palladium declined 0.4% to US$1,383.08.