Gold hits two-month high as investors await US inflation data

Gold prices surged past the US$4,400 mark per ounce on Monday as traders turned their focus to upcoming US inflation data. The precious metal had climbed 3.6% over the previous two trading sessions, breaching the important 100-day moving average. This technical indicator suggested a potential recovery after a period of price dips.

Increased buying from gold-backed exchange-traded funds in China and the ascent of the metal through the 100-day moving average further fueled the technical buying. However, traders are closely watching the latest US inflation report scheduled for release on Wednesday. Economists predict that the consumer price index may have risen by 0.1% in July, compared to a 0.4% decline in June.

This moderate increase could help ease inflation concerns within the Federal Reserve. Nonetheless, the Fed's decision to potentially raise interest rates will be influenced by persistently high energy prices. Recent geopolitical tensions between Iran and the US have added to this pressure. Meanwhile, the Bank of Cleveland's president Beth Hammack suggested that several rate hikes might be necessary to bring inflation under control to the central bank's 2% target.

Hammack was among three Fed officials who dissented during the July meeting, voting against keeping interest rates unchanged. Despite gold's recent gains, the metal remains around 17% below its levels prior to the Iran conflict in late February. At 7:30 am Singapore time, spot gold was trading at US$4,395.64 an ounce, while silver held steady at US$65.75 per ounce.

Platinum and palladium showed little movement. The Bloomberg Dollar Spot Index, which measures the US currency, edged down slightly after gaining 0.2% in the prior session.