Gold rises from two-week low ahead of US inflation data

Gold rose on Tuesday (Wednesday) after hitting a two-week low earlier in the session, as markets awaited key US inflation data. Meanwhile, escalating tensions between Tehran and Washington pushed oil prices higher, bolstering expectations that the US Federal Reserve will raise interest rates. Spot gold increased by 0.6 percent to $4,023.77 per ounce, after touching a low of $3,983.29, its lowest level since July 1.

US August gold futures rose 0.6 percent to $4,030.30. Gold had fallen by about 3 percent in the previous session, marking its largest single-day drop in over a month, as continued fighting between the United States and Iran drove oil prices to their highest level in a month.

Gold is viewed as a hedge against inflation, but rising interest rates often diminish its appeal because it yields no return, while investors tend to favor income-generating assets. Ilia Spivak, head of global macroeconomics at Tasty Trade, said: “Markets find themselves in a situation that discourages decisive action, facing a wide range of potential risks. Of course, there is testimony from Warsh and consumer price index data, so there are many factors to monitor, as well as developments in the Middle East.”

Investors are closely watching the US Consumer Price Index data for June, scheduled for release later tomorrow, seeking new indicators on inflation and the Federal Reserve’s interest rate trajectory. Attention is also focused on producer price index data and the first semi-annual testimony of Federal Reserve Chair Kevin Warsh before Congress this week.