Gold Slips as Dollar Strengthens Ahead of US Inflation Data
Bullion edges lower as investors assess the dollar's strength and await US inflation readings that could influence the Federal Reserve's interest-rate path.
Gold prices eased on Tuesday, October 13, as the US dollar held firm near an 18-month high and investors awaited key American inflation data for signals on the Federal Reserve's interest-rate trajectory.
Spot gold fell 0.2% to $4,164.45 per ounce by 0201 GMT, after reaching a one-week high in the previous session. US gold futures for December delivery declined 0.1% to $4,187.90 per ounce.
The stronger dollar made gold, which is priced in the US currency, more expensive for holders of other currencies. This reduced the metal's appeal as traders reassessed the outlook for monetary policy and inflation.
Markets are focused on the US Consumer Price Index (CPI), due Wednesday, followed by the Producer Price Index (PPI) report on Thursday. The readings could influence expectations for the Federal Reserve's next interest-rate decision.
Kyle Rodda, senior financial market analyst at Capital.com, said US CPI data would be critical for gold in the short term. He noted that a stronger-than-expected inflation reading, particularly in core inflation, could increase expectations of an October rate hike and put further downward pressure on bullion.
Higher interest rates generally weigh on gold because the metal does not pay interest, making yield-bearing assets relatively more attractive. According to the CME FedWatch tool, traders were pricing in a 21% chance of a Federal Reserve rate hike in October and an 88% probability of an increase by December.
Cleveland Federal Reserve President Beth Hammack said the central bank should move relatively quickly towards a more restrictive monetary policy stance to contain inflation. She expressed concern that price pressures had become broader-based and were beginning to influence companies' pricing plans.
Geopolitical developments also remained in focus. Saudi Arabia reported renewed incoming fire and said Riyadh airport would remain closed following a deadly missile strike on its departure terminal claimed by Yemen's Iran-aligned Houthi movement.
Other precious metals also declined. Spot silver fell 0.5% to $60.01 per ounce, platinum slipped 0.2% to $1,682.47, and palladium dropped 0.5% to $1,137.69.