Gold prices edged lower on Tuesday after earlier gains, with a softer U.S. dollar providing support as investors weighed expectations for a potential Federal Reserve interest-rate increase against forthcoming U.S. inflation figures.
At 03:15 ET (07:15 GMT), XAU/USD declined 0.1% to $4,402.49 an ounce, while Gold Futures were down 0.7% at $4,447.11. XAG/USD silver rose 0.2% to $66.32 an ounce and XPT/USD platinum gained 0.3% to $1,828.78.
The U.S. Dollar Index was marginally lower at 98.90.
Yen Rally Provides Support for Gold
The Japanese yen continued its recent advance against the U.S. dollar, moving towards its strongest level of the year as traders increased expectations that the Bank of Japan could raise interest rates.
The yen’s advance contributed to weakness in the dollar, providing some support for gold. As bullion is priced in dollars, a decline in the U.S. currency can reduce its cost for buyers using other currencies.
Gold declined during the previous week and has subsequently traded largely around $4,400 an ounce. Prices have remained in a relatively narrow range since recovering from levels near $4,000 in July.
Energy markets are also being monitored. Brent crude has approached $100 a barrel amid renewed U.S.-Iran tensions and concerns about potential disruptions around the Strait of Hormuz.
Higher energy costs can contribute to inflationary pressures, adding another factor for investors assessing the outlook for interest rates.
Markets Await U.S. Inflation Figures
Markets were assigning an approximately 60% probability to a Federal Reserve interest-rate increase next week following last week’s stronger-than-expected U.S. nonfarm payrolls report.
Attention now turns to U.S. consumer price figures due later this week, which will provide further information on inflation before the Federal Reserve’s next policy decision.
Tony Sycamore, senior market analyst at IG, said gold finished the previous session lower at around $4,406, with the employment report and higher energy prices contributing to the decline.
Sycamore expects those factors to put upward pressure on U.S. Treasury yields when markets reopen, which could create additional pressure on bullion.
Chinese Central Bank Demand Remains in Focus
Purchases by China’s central bank are another factor being monitored in the gold market.
According to the supplied information, the People’s Bank of China accelerated its gold purchases in August to their highest monthly level since 2023, despite higher bullion prices.
Investors are now monitoring U.S. inflation data alongside movements in the dollar, Treasury yields and energy markets as they assess the outlook for Federal Reserve monetary policy.
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