Gold gains as dollar eases with US inflation data on radar

Gold prices rose on Tuesday as the US dollar weakened, with traders keeping an eye on upcoming inflation figures that could influence the Federal Reserve’s future actions. Spot gold increased by 0.6% to $4,429.89 per ounce, while US gold futures for December delivery held steady at $4,475.10. The US dollar index slipped by 0.4%, making metals priced in greenbacks more appealing to foreign investors.

Chris Weston, the head of research at Pepperstone Group, noted that "Gold remains locked in a battle between buyers and sellers, with neither party showing enough conviction to drive a sustained and persistent directional move." The U.S. producer price index data is expected on Thursday, and the consumer price index report is slated for Friday.

Spot gold had slipped in the previous two days after reports indicated a sharp acceleration in U.S. job growth in August, with the unemployment rate remaining unchanged at 4.1%, hinting at a positive labor market trend. According to the CME FedWatch Tool, there is a 60% probability of a rate hike at the Federal Reserve's upcoming policy meeting.

Elevated interest rates typically make non-yielding assets like gold less attractive. "We don’t see gold falling back too much if and when the central bank does raise rates. More important than the rate move is the notion that markets are somewhat uneasy about what the Fed and the Treasury are signalling," said Edward Meir, an analyst at Marex.

Geopolitical tensions also played a role, as Iran warned the United States of "economic warfare" after firing an advanced missile at U.S. warships just days after both sides had engaged in conflict. Silver saw a 1% gain at $66.78 per ounce, platinum increased by 0.4% to $1,834.00, and palladium rose by 1% to $1,402.87.