Gold inches up on subdued dollar; US inflation data looms

GOLD prices ticked higher on Monday (Sep 12) as the dollar hovered near recent lows, with investors’ focus being on a key US inflation reading as it could influence the size of the Federal Reserve’s next interest-rate hike.

Spot gold rose 0.1 per cent to US$1,717.17 per ounce, as of 12.57 am GMT.

US gold futures were flat at US$1,728.70.

The dollar index held close to a more than one-week low hit on Friday. A weaker dollar makes gold less expensive for buyers holding other currencies.

Fed officials on Friday ended their public comment period ahead of the US central bank’s Sep 20-21 policy meeting, with strong calls for another oversized rate increase to battle high inflation.

Higher interest rates increase the opportunity cost of holding the non-yielding bullion and boosts the dollar.

The US Consumer Price Index (CPI) data, due on Tuesday, is expected to show that prices rose at an 8.1 per cent pace over the year in August, compared with an 8.5 per cent print for July.

Meanwhile, European Central Bank policymakers see a rising risk that they will have to raise their key interest rate to 2 per cent or more to curb record-high inflation in the eurozone despite a likely recession, sources told Reuters.

Physical gold demand in some Asian hubs remained firm last week as lower prices lured buyers, although an uptick in domestic rates restrained purchases in India.

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Gold prices subdued as resilient dollar dampens appeal

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.16 per cent to 966.64 tonnes on Friday from 968.15 tonnes on Thursday.

Speculators cut net long position by 19,510 contracts to 1,217 in week to Sep 6, while net short position increased in Comex silver, the US Commodity Futures Trading Commission (CFTC) said on Friday.

Spot silver gained 0.9 per cent to US$18.94 per ounce, platinum slipped 0.3 per cent to US$878.21 and palladium rose 0.2 per cent to US$2,177.47. REUTERS