Gold prices ease as investors await U.S. inflation data
Bullion prices drift lower on Tuesday after a gain of more than 1% in the previous session, as traders reassess risk sentiment and the likely path of Federal Reserve policy. The pullback comes as markets await U.S. consumer inflation data later in the day, with producer price figures due on Friday.
Highlights
- Spot gold falls 0.6% to $4,115.12 per ounce as of 0238 GMT, while U.S. gold futures for December gain 0.2% to $4,123.90.
- CME's FedWatch tool shows traders price in an 84% probability of a Fed rate hike in December, raising opportunity costs for holding gold.
- Spot silver drops 0.6% to $53.04, platinum falls 0.3% to $1,571.70, and palladium declines 0.4% to $1,037.50 amid easing oil prices and geopolitical uncertainty.
Market moves and policy signals
As reported by Reuters, spot gold is down 0.6% at $4,115.12 an ounce as of 0238 GMT, while U.S. gold futures for December delivery are 0.2% higher at $4,123.90.Kyle Rodda, senior financial market analyst at Capital.com, says the move reflects profit-taking after the previous session's rally, with prices easing from highs reached during the U.S. session. He adds that if the U.S. continues to avoid escalating the Middle East conflict and oil prices keep reversing, that could support gold through its effects on the dollar, inflation and interest rate expectations.
Richmond Federal Reserve President Tom Barkin says the U.S. central bank should move monetary policy with care as it responds to inflation, which he describes as its biggest risk. He also says he has no base case yet for what should be done at the December meeting.
Geopolitical backdrop and broader metals trade
Market sentiment is also tracking developments in the Middle East after U.S. President Donald Trump says on Monday that he plans to hold off on new military strikes against Iran for the time being, following appeals from countries in the region including Qatar. Oil prices edge lower on Tuesday, extending the previous day's losses.Traders currently price in an 84% chance that the Fed will raise rates in December, according to CME's FedWatch tool. Higher interest rates raise the opportunity cost of holding non-yielding bullion, which tends to weigh on investor demand.
Among other precious metals, spot silver falls 0.6% to $53.04 per ounce, platinum slips 0.3% to $1,571.70 and palladium declines 0.4% to $1,037.50.
Earlier, we reported that Fed Chair Kevin Warsh faced internal resistance to a quieter Fed as markets weighed an October rate hike.
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