Gold edged lower on Tuesday even as a softer U.S. dollar cushioned the metal, with traders weighing Federal Reserve rate-hike odds against upcoming U.S. inflation data. The Japanese yen's advance pressured the dollar, while central-bank buying from China kept underlying demand firm.
XAU/USD traded 0.1% lower at $4,402.49 an ounce at 03:15 ET on Tuesday, after rising earlier in the session. Gold futures fell 0.7% to $4,447.11, as a weaker dollar offset expectations of a Federal Reserve interest-rate increase and investors awaited fresh U.S. inflation data.
The U.S. Dollar Index was marginally lower at 98.90. Silver rose 0.2% to $66.32 an ounce, while platinum gained 0.3% to $1,828.78.
Yen Rally Weighs on the Dollar
The Japanese yen extended its recent advance against the dollar, approaching its strongest level of the year, as traders raised bets that the Bank of Japan could raise interest rates. That dollar weakness supported gold, since bullion priced in dollars becomes cheaper for buyers holding other currencies.
Gold had fallen the previous week and has since traded mostly around $4,400 an ounce, remaining in a narrow range after recovering from levels near $4,000 in July. Brent crude, meanwhile, approached $100 a barrel amid renewed tension between the United States and Iran and concerns about disruption around the Strait of Hormuz, a factor that can add to inflationary pressure.
Fed Bets and Inflation Data Ahead
Markets were pricing roughly a 60% probability of a Federal Reserve rate increase next week following a stronger-than-expected U.S. nonfarm payrolls report released last week. Investors now await U.S. consumer price data later this week for further signals on the inflation outlook and its implications for monetary policy.
According to Tony Sycamore, senior market analyst at IG, gold ended the previous session near $4,406, with the stronger jobs report and higher energy prices contributing to the decline. Sycamore expects those factors to push Treasury yields higher once markets reopen, which could weigh on gold.
PBOC Steps Up Gold Purchases
Central-bank demand from China also remained a factor in the gold market. The People's Bank of China accelerated its gold purchases in August to the highest monthly level since 2023, despite higher bullion prices.
Sycamore's outlook leaves gold caught between a softer dollar and the prospect of higher Treasury yields heading into this week's inflation print.
Source: InvestorsHub
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