Gold prices fell on Tuesday as investors took profits after the precious metal gained more than 1% in the previous session, while awaiting US inflation data for clues about the future direction of the Federal Reserve’s monetary policy.
Spot gold dropped 0.6% to $4,115.12 an ounce by 02:38 GMT. Meanwhile, US gold futures for December delivery rose 0.2% to $4,123.90 an ounce.
Kyle Rodda, a financial market analyst at Capital.com, said: “Prices are retreating from the highs reached during the US session, which can be attributed to profit-taking.”
He added: “If the situation continues, with the United States showing no appetite for escalating the conflict in the Middle East and oil prices declining as a result, this would be very positive for gold because of the impact on the dollar, inflation and interest rate expectations.”
On Monday, US President Donald Trump said he intended to exercise restraint and refrain from launching further military strikes against Iran for the time being, following appeals from regional countries, including a request from Qatar’s prime minister during talks at the White House.
Oil prices also fell on Tuesday, extending losses from the previous session.
Meanwhile, Tom Barkin, president of the Federal Reserve Bank of Richmond, said on Monday that the US central bank should proceed “cautiously” with monetary policy as it considers how to respond to inflation, which remains its biggest risk. He added that he did not have a baseline view on what the Fed should do at its December meeting.
According to CME Group’s FedWatch tool, traders currently see an 84% probability that the Federal Reserve will raise interest rates in December.
Higher interest rates increase the opportunity cost of holding non-yielding gold, making the precious metal less attractive to investors.
Investors are awaiting the Consumer Price Index report, scheduled for release later on Tuesday, followed by the Producer Price Index data on Friday.
Among other precious metals, spot silver fell 0.6% to $53.04 an ounce, platinum declined 0.3% to $1,571.70, and palladium dropped 0.4% to $1,037.50.
Source: Reuters
