Gold prices rise as softer dollar, lower oil support market ahead of U.S. inflation data

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Gold prices rise ahead of U.S. data

Highlights

Spot gold rises 0.3% to $4,206.01 per ounce and U.S. gold futures gain 0.3% to $4,230.40 amid a softer dollar and weaker oil prices.
Oil prices fall after Donald Trump's announcement of an energy ceasefire between Russia and Ukraine, reducing inflation and interest-rate concerns and boosting gold's appeal.
Traders assign a 17% chance of an October U.S. rate hike and 86% for December as focus turns to upcoming CPI, PPI, and retail sales data.

Price moves and drivers this week

As reported by Pakistan Business Recorder, spot gold is up 0.3% at $4,206.01 per ounce as of 0253 GMT, after touching its highest level since October 2 earlier in the day. U.S. gold futures for December delivery also gain 0.3% to $4,230.40.

Tim Waterer, chief market analyst at KCM Trade, says softer oil prices following Donald Trump’s reported energy ceasefire announcement between Russia and Ukraine, together with a more subdued dollar, give gold room to move higher at the start of the week. He adds that easing oil prices reduce some immediate inflation and interest-rate anxiety, which helps gold from a yield perspective.

Trump says on Sunday that an energy ceasefire between Russia and Ukraine is effective immediately, although Ukrainian leader Volodymyr Zelenskiy says he is still waiting to see details of the deal. Oil prices fall on expectations that more Russian supplies could return to the market, while a muted U.S. dollar makes greenback-priced bullion more affordable for buyers using other currencies.

Inflation outlook and broader metals market

Market attention is now turning to the U.S. Consumer Price Index report due on Wednesday, followed by the Producer Price Index and retail sales data on Thursday. While gold is commonly viewed as a hedge against inflation, higher interest rates tend to reduce the appeal of non-yielding bullion.

Traders currently see a 17% chance of a rate hike in October and an 86% probability of an increase by December, according to CME’s FedWatch tool. At the same time, U.S. consumer sentiment slumps further in early October as the rising cost of living linked to the Middle East conflict weakens households’ views of the economy.

Elsewhere in precious metals, spot silver rises 0.5% to $61.12 per ounce, platinum gains 1% to $1,704.70 and palladium climbs 1.2% to $1,161.81.

Our earlier article on China’s surging gold buying highlighted how record imports and sustained purchases by the People’s Bank of China have become a major pillar of demand. We noted that reserve diversification away from dollar assets, along with limited domestic investment alternatives, has helped keep bullion supported even when prices pull back.

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