Gold bounces from two-week low as markets await US inflation data
Spot gold rises 0.5% to US$4,019.50 per ounce by 0821 GMT after falling to its lowest level since Jul 1 earlier in the session
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[BENGALURU] Gold ticked higher on Tuesday (Jul 14) after hitting a two-week low, while focus was on the US consumer price index data and Federal Reserve chair Kevin Warsh’s testimony for monetary policy clues.
Spot gold rose 0.5 per cent to US$4,019.50 per ounce by 0821 GMT, after falling to its lowest level since Jul 1 earlier in the session.
US gold futures for August delivery gained 0.5 per cent to US$4,026.20.
“Gold prices are edging higher today, supported by a pause in the US dollar’s recent rally,” said ActivTrades analyst, Ricardo Evangelista.
The US dollar index was down 0.2 per cent, making greenback-priced bullion less expensive for holders of other currencies.
Investors await the June US CPI data, along with Warsh’s first semi-annual congressional testimony, both due later in the day.
“A CPI reading above the region of 3.8 per cent could reinforce expectations of a hawkish Federal Reserve and create a headwind for gold prices,” Evangelista said.
Elevated oil prices have heightened inflation concerns, strengthening the case for the Fed to keep rates higher and reducing non-yielding gold’s appeal.
Spot gold fell nearly 3 per cent in the previous session, its biggest daily percentage drop in more than a month, as renewed hostilities between the US and Iran drove energy prices higher.
Oil prices rose to their highest in four weeks, as the US reimposed its naval blockade of Iran and the attacks in the Strait of Hormuz fuelled uncertainty about energy flows.
Meanwhile, the US central bank may need to raise interest rates “in the near term” if coming data show inflation continuing well above the 2 per cent target, Fed governor Christopher Waller said on Monday.
Traders are now pricing in about a 75 per cent chance of a rate hike in September, CME FedWatch Tool’s data showed.
Among other metals, spot silver rose 0.6 per cent to US$58.00 per ounce, and palladium climbed 1.5 per cent to US$1,265.79. Platinum dropped 0.2 per cent to US$1,601.51. REUTERS
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