Gold stays subdued as markets await US inflation figures

what happened

According to Newsmetry API, spot gold was down 0.2% at $4,161.81 an ounce by 0015 GMT on Tuesday. Prices had reached a one-week high in the previous session. US gold futures for December delivery slipped 0.1% to $4,186.60.

The US dollar remained close to an 18-month peak, making dollar-denominated metals more expensive for holders of other currencies. Investors are awaiting the Consumer Price Index report due on Wednesday and the Producer Price Index release scheduled for Thursday.

Cleveland Fed President Beth Hammack said the central bank should move “relatively quickly” toward a restrictive monetary policy stance to contain inflation that she believes has become more broad-based and is beginning to affect companies’ pricing plans. The Fed is broadly expected to leave rates unchanged this month, while markets see an 88% chance of a December rate hike, according to CME’s FedWatch tool.

Investors generally favor yield-bearing assets over gold when interest rates are high. Spot silver fell 0.4% to $60.09, platinum declined 0.3% to $1,680.95 and palladium dropped 0.7% to $1,135.70. Saudi Arabia said it was facing another barrage of incoming fire and that Riyadh airport would remain closed after Saturday’s deadly missile strike on a departure terminal, claimed by Yemen’s Iran-aligned Houthis.

why it matters

The CPI and PPI reports may affect expectations for the Federal Reserve’s interest-rate path. A firm dollar and prospects for tighter policy add pressure to metals that do not pay interest.

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