Gold prices edged lower on Tuesday as rising oil prices heightened inflation concerns, while investors awaited key US inflation data for clues on the Federal Reserve’s interest rate outlook.
Spot gold fell 0.3% to US$4,390.50 per ounce by 0816 GMT after reaching as high as US$4,442.70 earlier in the session. US gold futures for December delivery declined 0.9% to US$4,435.
“Gold trades cautiously today, caught between Fed rate hike bets and dollar softness. Higher oil prices stoke inflation risks and expectations for Fed rate hikes, putting the precious metal under pressure,” said Nikos Tzabouras, a senior market analyst at Jefferies-owned Tradu.com.
Oil prices extended their gains to multi-week highs amid heightened supply concerns following attacks by Tehran-backed Houthis on energy facilities and cities in Saudi Arabia.
Gold has also come under pressure following stronger-than-expected US employment data last week, which showed job growth accelerated sharply in August while the unemployment rate held steady at 4.1%.
Markets are now pricing in about a 60% chance of an interest rate hike at the Fed’s next policy meeting, up from around 50% before the jobs data, according to the CME FedWatch Tool.
Higher interest rates tend to weigh on non-yielding gold, although a softer US dollar provided some support by making dollar-priced bullion cheaper for overseas buyers.
Investors are now awaiting US producer price data on Thursday and consumer price data on Friday for further signals on the Fed’s monetary policy.
Meanwhile, RHB Research maintained its bullish technical view on COMEX gold, recommending traders keep long positions initiated at US$4,273.30. The research house said gold is likely to consolidate or pull back towards US$4,300, with the 50-day SMA continuing to support the bullish setup.
RHB Research identified US$4,300 as the key support level and US$4,500 as the immediate resistance, with a break higher potentially opening the way towards US$4,700.
Among other precious metals, spot silver fell 0.5% to US$65.76 per ounce, platinum dipped 0.2% to US$1,821.36 and palladium declined 0.4% to US$1,383.08.
