Gold price wilts as Oil shock puts CPI in Fed crosshairs
Gold (XAU/USD) registers losses of over 0.44% on Tuesday amid a light economic docket in the US, due to a narrative dominated by the US-Iran conflict, higher Oil prices and traders bracing for the release of US inflation reports, with the PPI expected on Thursday, followed by the next day’s CPI.
Gold prices slipped over 0.44% on Tuesday as investors were preoccupied with the US-Iran conflict, rising oil prices, and anticipation of inflation data releases. West Texas Intermediate (WTI) oil climbed 1% to $92.10 per barrel following attacks in the Middle East. The Federal Reserve's focus on inflation data could lead to a change in short-term interest rates.
The upcoming release of the Consumer Price Index (CPI) on September 4 and Core CPI on September 5 could prompt a rate increase by the Fed, causing gold prices to decline. The 10-year Treasury yield remains flat at 4.788%, while the US Dollar Index (DXY) is down 0.04% at 98.86. Gold has maintained its position as a safe-haven asset during turbulent times, with central banks accumulating large amounts of the metal, totaling 1,136 tonnes worth around $70 billion in 2022.
Gold's inverse correlation with the US Dollar and US Treasuries implies that a weaker Dollar could lead to higher gold prices. The markets are closely watching the upcoming economic data releases to determine the direction of gold prices.
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