Gold eases on firm dollar; spotlight on US inflation data
Spot gold fell 0.2% to $4,164.45 per ounce by 0201 GMT after hitting a one-week peak on Monday
Gold prices declined on Tuesday as the US dollar remained strong, with traders focusing on upcoming US inflation data for clues about the Federal Reserve's interest-rate path. Spot gold slipped 0.2% to $4,164.45 per ounce by early morning, after peaking at a one-week high on Monday. December US gold futures were down 0.1% at $4,187.90.
The US dollar found itself near an 18-month high, making dollar-based metals pricier for non-dollar holders. The key US inflation indicators, the Consumer Price Index (CPI) and Producer Price Index (PPI), are scheduled for release on Wednesday and Thursday, respectively. Analysts believe CPI data will be crucial in the near term for gold, as higher-than-expected inflation and expectations of an early interest rate hike could lead to further declines in gold prices.
Currently, the probability of a Fed rate hike this month stands at 21%, while the chance of a December hike is viewed at 88%, according to CME's FedWatch tool. Federal Reserve officials, such as Cleveland Fed President Beth Hammack, have suggested a swift shift to a tighter monetary policy to tackle inflation, which they believe has become more widespread and is starting to impact firms' pricing strategies.
Geopolitically, Saudi Arabia reported renewed attacks, with Riyadh airport remaining closed following a missile strike claimed by Yemen's Iran-backed Houthi group. Silver prices slipped 0.5% to $60.01, platinum fell 0.2% to $1,682.47, and palladium declined 0.5% to $1,137.69.
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