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Gold holds above $2,500 ahead of inflation data
Gold prices held above $2,500 an ounce on Tuesday, as traders awaited key U.S. inflation data on Wednesday for more clues on how much the Federal Reserve may cut interest rates next week.
Spot gold rose 0.3 percent to $2,512.38 an ounce. U.S. gold futures rose 0.4 percent to $2,543.1.
The dollar hit a one-week high, making gold more expensive for holders of other currencies.
The market is now focused on U.S. consumer price index data due on Wednesday and producer price index readings on Thursday.
The consumer price index is expected to rise 0.2 percent on a monthly basis in August, according to a Reuters poll, unchanged from July.
“Inflation data is expected to reflect further slowdown and give the green light to the Fed to cut rates... With no major surprises in the data, gold prices are expected to remain well supported above $2,500. We expect gold prices to touch $2,660 in the coming months,” said Ye Jun Rong, senior market analyst at IG.
Lower interest rates reduce the opportunity cost of holding the non-yielding bullion.
The Fed is almost certain to cut rates when it meets next week. According to the CME FedWatch tool, traders see a 70% chance of a 25 basis point cut versus a 30% chance of a 50 basis point cut.
Elsewhere, spot silver fell 0.3% to $28.27 an ounce. While platinum rose 0.5% to $942.45, palladium rose 0.4% to $950.55.
