Gold rises for third session amid anticipation of inflation reports

Gold rose today, Tuesday, for the third consecutive session, reaching its highest level in over 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 by 02:17 GMT, marking its highest level since June 5.

Tony Sycamore, a market analyst at IG, said the move was “driven in part by fear of missing out among those who missed the drop to the $4,000 level, some short covering, 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 data due on Thursday are likely to influence monetary policy expectations. This follows weak US jobs data for July released last week, which led markets to reduce expectations for the Federal Reserve (the US central bank) to raise interest rates 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.

Fouad Rizqzada, a market analyst at Forex.com, wrote in a note, “If data continue to point to economic slowdown without a significant rise in inflation, markets may once again reduce their expectations for monetary tightening. This is likely to make the dollar vulnerable to weakness and provide another supportive backdrop for gold.”

On the geopolitical front, US President Donald Trump responded to Iran’s conditions for reaching an agreement by demanding that the Islamic Republic pay compensation for deaths resulting from wars, attacks, and protests, in a verbal escalation likely to complicate efforts to reopen the Strait of Hormuz.

In other precious metals, spot silver rose 0.9 percent to $66.30 per ounce, platinum increased 0.7 percent to $1,765.26, and palladium rose 0.8 percent to $1,394.