Gold drifts lower from seven-week peak, US inflation data looms
Gold prices dipped due to profit-taking after a seven-week high, with investors now focused on upcoming US inflation data for clues on the Federal Reserve's interest rate decisions.
- Impact of US jobs data on Fed rate hike odds.
- Upcoming US inflation data and gold's price direction.
- Geopolitical risks in the Middle East.
Gold slipped on Monday as investors took profits after prices hit a seven-week high in the previous session, while markets looked to US inflation data for fresh clues on the Federal Reserve’s interest rate path.
Spot gold was down 0.5% at $4,322.28 per ounce, as of 0200 GMT. Prices hit their highest since June 17 on Friday after weaker-than-expected U.S. jobs data.
US gold futures fell 0.4% to $4,381.60 on Monday.
“Gold is edging slightly lower as it succumbs to some profit-taking following last week’s strong NFP-inspired gains. This looks like a natural stabilisation rather than a meaningful shift in sentiment - I expect gold to remain supported above the $4,300 level in the near term,” said Tim Waterer, chief market analyst at KCM Trade.
Data showed the US economy unexpectedly shed jobs in July and previously reported job gains for the prior two months were revised sharply lower.
Futures markets then flipped the odds of a rate hike at the September 15-16 Federal Open Market Committee meeting from likelier-than-not to a worse-than-even chance.
A lower interest rate environment boosts the attractiveness of gold against income-generating assets, as bullion itself earns no interest.
Key US data scheduled for release this week include the Consumer Price Index (CPI) on Wednesday and the Producer Price Index (PPI) on Thursday.
“Soft readings would strengthen the case for a rate hold and clear a path for further upside in gold… Middle East uncertainty remains a lingering risk factor, as any renewed escalation that drives oil prices up could quickly pressure the metal,” said Waterer.
On the geopolitical front, Iran said it was nearing a final pact with Oman defining new shipping lanes between them through the Strait of Hormuz but repeated that the US must meet several conditions before the strategic waterway is reopened.
Spot silver fell 0.2% to $63.45 per ounce, platinum lost 0.1% to $1,742.50 and palladium slipped 1.1% to $1,362.97.