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Gold slipped from its all-time closing high in the previous session, as traders booked profits ahead of a US inflation report that may prove pivotal in shaping the Federal Reserve’s interest-rate path.
Bullion fell as much as 0,6 percent following a 1,7 percent move higher on Monday, as markets braced for US producer price index figures later yesterday and consumer price index numbers today.
The data will offer clues on whether Fed policymakers have room to engineer a “soft landing” as they seek to tame inflation while also avoiding a recession.
The CPI report is expected to show price increases picked up modestly in July, though the annual metrics should continue to rise at a slow pace. The recent easing of price pressures has boosted confidence the Fed will reduce rates next month. Lower borrowing costs typically aid gold, which doesn’t pay interest.
Markets also continued to monitor a potential escalation in the Middle East amid fears that Iran could attack Israel as soon as this week, prompting investors to seek safe assets such as gold and Treasuries.
“It is likely investors are positioning cautiously ahead of the inflation data,” said Zhong Liang Han, an analyst at Standard Chartered Plc. Bullion is also seeing some “consolidation after rising geopolitical tensions.”
Bullion has gained almost 20 percent this year amid mounting optimism on rate cuts. The metal has also been supported by large purchases from central banks and robust demand from Chinese consumers.
Increased geopolitical risks — including conflict in the Ukraine and the upcoming US election — have also underscored gold’s appeal as a haven.
Spot gold was down 0,4 percent to US$2 462,33 at 1:53 p.m. in Singapore, within US$30 of its highest ever intraday price reached last month. It rose to a new closing high of US$2 472,90 on Monday.– Bloomberg
Online Reporter