Gold prices edged lower on Tuesday as the dollar regained some footing, with investors awaiting US inflation numbers due this week for clarity on whether more rate hikes are on the table.
Spot gold was down 0.1% at $1,934.22 per ounce by 0329 GMT, while US gold futures were flat at $1,968.80.
The dollar strengthened 0.2% against major currencies, making bullion more expensive for overseas buyers.
“The $64 question this week is the US inflation outcome,” said Clifford Bennett, chief economist at ACY Securities.
“The inflation reading, particularly the core number, could still be of significant concern to the Fed.
The market already knows headline inflation is trending lower, but any firmness in the data could be a fresh downward catalyst for gold in the short term.“
A hotter-than-expected CPI number on Thursday could raise the possibility of another rate hike when Fed officials meet again in September. Rate hikes tend to lift bond yields, raising the opportunity cost of holding zero-yield bullion.
Gold prices are down for a second straight session, mainly weighed by comments from Fed Governor Michelle Bowman that additional interest rate hikes will likely be needed in order to lower inflation to the US Federal Reserve’s 2% target.
Markets are also digesting trade data from the world’s second-largest economy, which showed China’s exports fell 14.5% in July year-on-year, while imports contracted 12.4%, in the biggest decline in outbound shipments since February 2020.
China is also the biggest consumer of gold.
Reflecting investor sentiment, holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, fell 0.3% on Monday.
Spot silver prices rose 0.1% to $23.17 and platinum eased 0.1% to $918.91. Palladium was also down 0.1% at $1,238.38.