Gold eases from seven-week peak, US inflation data looms

GOLD slipped on Monday (Aug 10) 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 0.3 per cent at US$4,330.46 per ounce, as of 0443 GMT. Prices hit their highest since Jun 17 on Friday after weak US nonfarm payrolls data.

US gold futures fell 0.2 per cent to US$4,390.60 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 US$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 Sept 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.

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Spot silver rose 0.3 per cent to US$63.77 per ounce and platinum gained 0.2 per cent to US$1,748.80, while palladium slipped 1 per cent to US$1,364.55. REUTERS