Gold ticks up on softer dollar, U.S. inflation data in focus

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Gold prices rose on Monday as the dollar

fell to a more than two-week low, prompting investors to buy

bullion, while markets eyed U.S. inflation data for further

clues on Federal Reserve rate hikes.

Spot gold was up 0.4% at $1,722.79 per ounce as of

0826 GMT.

U.S. gold futures rose 0.3% to $1,733.20.

The dollar index hovered close to its lowest level

since Aug. 26, making gold less expensive for holders of other

currencies.

“Gold’s gains at the onset of this week should prove

temporary if the incoming U.S. CPI prints point to a stubborn

climb in inflation, forcing the Fed to keep the pedal to the

metal with its policy tightening,” Han Tan, chief market analyst

at Exinity, said.

“Data that underscores the Fed’s need to stay

ultra-aggressive in its battle against inflation, a theme that’s

been a constant thorn in gold bulls’ side for much of this year,

would only further weigh down the zero-yielding precious metal.”

The U.S. Consumer Price Index, due on Tuesday, is expected

to show that August prices rose at an 8.1% pace over the year,

compared with an 8.5% print for July.

“A further indication that inflation may have peaked would

be encouraging for the gold market,” said Clifford Bennett,

chief economist at ACY Securities.

Markets have ramped up their expectations for a 75 basis

point (bp) Fed hike this month to more than 90%. Gold tends to

suffer in a higher interest rate environment.

Fed officials on Friday ended their public comment period

ahead of the central bank’s Sept. 20-21 policy meeting, with

strong calls for another oversized rate increase to battle

sky-high inflation.

Spot silver rose 2.1% to $19.18 per ounce, its

highest in more than two weeks.

Platinum was 1.5% higher at $893.98 and palladium

rose 0.5% to $2,183.49.

(Reporting by Arundhati Sarkar and Eileen Soreng in Bengaluru;

Editing by Edmund Klamann)

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