Gold rises for third session amid anticipation of inflation reports

Gold rose yesterday, Tuesday, for a third consecutive session, reaching its highest level in more than two months, as investors awaited inflation data to gauge the trajectory of US interest rates. Spot gold rose 1 percent to $4,432.74 per ounce, marking its highest level since June 5. US gold futures gained 1.7 percent to $4,492.60. Tony Sycamore, market analyst at IG, said the move was “driven by a degree of fear of missing out among those who missed the drop to the $4,000 level, some short-covering trades, and a return of flows into safe-haven assets.” Sycamore added, “In the medium term, we expect prices to break through this level and pave the way for a stronger rally toward $5,000.” The US Consumer Price Index report, scheduled for release tomorrow, Wednesday, and Producer Price Index data due on Thursday, are likely to influence monetary policy expectations, following weak US jobs data for July released last week that reduced market expectations for a Federal Reserve rate hike next month. At its July meeting, the Federal Reserve kept interest rates unchanged amid divided opinions. Lower interest rates typically support gold, which yields no return. In a note, Fuad Rizqzada, market analyst at Forex.com, wrote, “If data continue to point to an economic slowdown without a significant rise in inflation, markets may again reduce their expectations for monetary tightening. This is likely to leave the dollar vulnerable to weakness and provide another supportive backdrop for gold.”