NEW YORK: Gold prices inched lower on Tuesday as rising oil prices fueled inflation concerns and boosted expectations for a September Federal Reserve rate increase, with investors awaiting US inflation data for further clues on the interest-rate outlook.
Spot gold fell 0.2percent to USD4,396.19 per ounce by 09:44 a.m. EDT (1344 GMT), while US gold futures for December delivery dropped 0.8percent to USD4,441.30.
“Gold is range-bound because it is capped by a higher probability of raising interest rates, which continues to hinder momentum in the market,” said Daniel Pavilonis, senior market strategist at Stone X. Brent crude neared the USD100-per-barrel mark, touching USD99.46, its highest level since July 24, fueling inflation worries.
The market continues to absorb the stronger-than-expected US jobs report and await upcoming CPI and PPI data, while higher oil prices are raising inflation concerns and supporting expectations for a September rate hike, said Peter Grant, vice president and senior metals strategist at Zaner Metals.
Spot gold fell as much as 2.4percent on Friday after data showed US job growth accelerated sharply in August while the unemployment rate held steady at 4.1percent, reinforcing signs of resilience in the labour market.
Traders are now pricing in about a 60percent chance of an interest rate hike at the central bank’s policy meeting, according to the CME FedWatch Tool, up from about 50percent before the data. The US producer price index data is due on Thursday and consumer price index figures on Friday.
Although gold is often viewed as a safeguard against inflation, rising interest rates tend to weigh on demand for the non-yielding metal.
Among other metals, silver edged 0.33percent lower to USD65.92 per ounce, platinum steady at USD1,827.83 and palladium slid 2.7percent to USD1,351.39.
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