Gold near 3-week high on dollar dip, eyes on US inflation data
Follow us Now on Telegram ! Get daily 10 - 12 important updates on Business, Finance and Investment. Join our Telegram Channel
Gold prices scaled a near three-week high on Tuesday, drawing support from a weaker dollar, while investors positioned for U.S. inflation data that could have a bearing on the Federal Reserve's rate hike path.
Spot gold was up 0.4% to $1,932.69 per ounce at 1223 GMT, set for a third consecutive session of gains. U.S. gold futures climbed 0.4% to $1,938.20.
"The reaction to the US inflation data is dependent on how fast it is slowing down... only if inflation surprises on the downside gold would benefit, as it would indicate a sooner end in the Fed hiking cycle," UBS analyst Giovanni Staunovo said.
Safe-haven gold tends to gain during times of economic or financial uncertainty, while lower rates also lift the appeal of the zero-yielding asset.
Bullion is being supported by a weaker dollar as the Fed seems to imply that it's at the end of the tightening cycle, "but gold bugs appear hesitant to over-commit ahead of Wednesday's U.S. inflation report," said Matt Simpson, senior market analyst at City Index.
The dollar index touched its lowest level since May 11, making gold cheaper for holders of other currencies. [USD/] [US/]
Several U.S. central bank officials on Monday said the Fed would likely need to raise interest rates further to bring down inflation, but the end to its current monetary policy tightening cycle was getting close.
"Also ongoing central bank gold purchases is likely helping the yellow metal," UBS's Staunovo added.
Elsewhere, a key measure of British wages matched its highest growth rate on record. But there were also some signs that the inflationary heat in the labour market is subsiding, offering the prospect of some relief ahead for the Bank of England.
Among other precious metals, spot silver was steady at $23.09 per ounce, platinum eased 0.1% to $925.99, and palladium slipped 0.4% to $1,235.70.
