Gold touches US$4,400 as traders turn focus to US inflation data
Bullion edges higher in early trading, after adding 3.6% over the previous two sessions
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GOLD advanced through US$4,400 an ounce ahead of a key US inflation report that could provide fresh clues to the US Federal Reserve’s appetite for an interest rate hike.
Bullion edged higher in early trading, after adding 3.6 per cent over the previous two sessions.
Technical buying was spurred by the metal’s ascent through the 100-day moving average on Monday (Aug 10), another sign of recovery after the emergence of dip-buyers and greater inflows from gold-backed exchange-traded funds in China.
Traders are turning their attention to the latest US inflation data due on Wednesday.
The closely-watched consumer price index is seen rising 0.1 per cent in July following a 0.4 per cent decline in June, according to the median projection in a Bloomberg survey of economists.
In the wake of Friday’s weak jobs report, a moderation in price growth may help alleviate some of the inflation anxiety at the Fed.
However, pressure on the US central bank to raise rates – a negative for gold, which does not pay interest – will build if energy prices remain high.
Oil held a three-day gain on Tuesday after US President Donald Trump made sweeping new demands on Iran, clouding the outlook for a deal to reopen the Strait of Hormuz.
The hardening stance makes it less likely that Teheran and Washington will agree any immediate pact to end the months-long war.
The Fed’s Bank of Cleveland president Beth Hammack said it is possible a number of rate hikes may be needed to bring inflation down to the central bank’s 2 per cent target.
Hammack was one of three Fed officials who dissented against July’s decision to keep borrowing costs steady.
Gold has rallied above the key US$4,000-an-ounce support threshold in recent weeks, with renewed investor appetite for the precious metal backed by an increase in central bank purchases.
Despite these recent gains, bullion remains about 17 per cent below levels before the Iran war began in late February.
Spot gold advanced 0.1 per cent to US$4,395.64 an ounce at 7.30 am in Singapore.
Silver was steady at US$65.75 an ounce. Platinum and palladium were little changed.
The Bloomberg Dollar Spot Index, a gauge of the US currency, fell marginally after gaining 0.2 per cent in the previous session. BLOOMBERG
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