Gold prices rise as dollar and oil fall ahead of US inflation data

Gold prices climbed to their highest level in over a decade on Monday, buoyed by a weaker U.S. dollar and falling oil prices. Investors were looking ahead to key U.S. inflation data for hints on the Federal Reserve's next step. Gold's price rose 0.3% to $4,206.01 per ounce by 2:53 a.m. GMT, after hitting its peak since October 2nd. U.S. gold futures for December delivery also gained 0.3% to $4,230.40.

Tim Waterer, chief market analyst at KCM Trade, explained that softer oil prices due to a reported ceasefire between Russia and Ukraine, along with a less strong U.S. dollar, presented a chance for gold to rise at the start of the week. As oil prices fell, some of the immediate inflation and interest rate concerns were alleviated, contributing to gold's appeal as a source of yield.

The U.S. dollar was relatively inactive, making gold more affordable for buyers holding different currencies. While gold is generally viewed as a hedge against inflation, the impact of higher interest rates can reduce the attractiveness of non-yielding bullion. Market participants are anticipating the U.S. Consumer Price Index report on Wednesday, followed by the Producer Price Index (PPI) and retail sales data on Thursday.

Traders estimate a 17% chance of a rate hike in October and an 86% probability of an increase by December, according to CME's FedWatch tool. Meanwhile, U.S. consumer sentiment dropped further in early October due to the rising cost of living caused by the Middle East conflict, negatively affecting households' economic outlook. Silver rose 0.5% to $61.12 per ounce, platinum gained 1% to $1,704.70, and palladium increased 1.2% to $1,161.81.