Gold subdued as investors focus on U.S. inflation data


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Gold prices inched lower on Tuesday as

investors awaited U.S. inflation data due later in the week that

could offer more clarity on the Federal Reserve’s rate-hike

plans to combat rising pricing pressures.

Spot gold was down 0.2% at $1,785.89 per ounce, as of

0710 GMT. U.S. gold futures eased 0.2% to $1,801.90.

On Monday, gold prices rose towards a one-month high scaled

last week, as the dollar and Treasury yields pulled back after

a rally driven by Friday’s blockbuster U.S. jobs report.

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Markets are looking ahead to the U.S. consumer price report

for July, which will be released on Wednesday. Analysts polled

by Reuters expect annual inflation to have eased to 8.7% from

9.1% in June.

“Investors understand that both the U.S. and global

economies are facing significant challenges, but the emphasis

will be on the question for how long higher rates will be a

weight on the market,” said Clifford Bennett, chief economist at

ACY Securities.

“Any surprise softening in the U.S. inflation number could

well be the catalyst for a tremendous surge in the gold price.”

Fed funds futures traders are now pricing for a 64.5% chance

of another 75-basis-point rate hike at the U.S. central bank’s

next policy meeting in September to combat soaring inflation.

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Although gold is seen as a hedge against inflation, higher

U.S. interest rates dull non-yielding bullion’s appeal.

U.S. consumers’ expectations for where inflation will be in

a year and three years dropped sharply in July, a New York

Federal Reserve survey showed on Monday, indicating U.S. central

bankers are winning the fight.

Meanwhile, Taiwan’s foreign minister said that China was

using the military drills it launched in protest against U.S.

House Speaker Nancy Pelosi’s visit as an excuse to prepare for

an invasion of the self-ruled island.

Spot silver was down 0.2% at $20.60 per ounce,

platinum fell 0.3% to $936.76, and palladium

slipped 1.8% to $2,190.13.

(Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu

Sahu and Uttaresh.V)

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