Gold Prices Steady as Markets Await US Inflation Data

Gold prices were little changed at around $4,180 an ounce on Tuesday as oil prices ended a three-session rally and the US dollar weakened, while expectations of an interest rate hike by the Federal Reserve this month remained subdued ahead of a busy week of US economic data releases. Investors are awaiting September’s US Consumer Price Index report on Wednesday, followed by the Producer Price Index and retail sales data on Thursday. Markets will also be watching Fed Chair Kevin Warsh’s appearance at the IMF-World Bank annual meetings on Friday for further clues on the central bank’s monetary policy outlook. According to CME’s FedWatch tool, traders are pricing in less than a 20% probability of a Fed rate hike this month, while the likelihood of an increase in December exceeds 85%. Meanwhile, Cleveland Fed President Beth Hammack said the central bank should move “relatively quickly” toward a more restrictive monetary policy stance to bring inflation under control.

Gold held below $4,200 an ounce on Tuesday, remaining under pressure as the US dollar climbed to an 18-month high ahead of key inflation reports that could shape the Federal Reserve’s next interest rate decision. The US consumer price index is due on Wednesday, followed by producer inflation data on Thursday. Markets are pricing in roughly an 80% probability that the Fed will leave interest rates unchanged this month, while assigning nearly an 88% chance of a rate hike in December. Investors also monitored geopolitical tensions as the US considers joining Saudi Arabia in its campaign against Iran-backed Houthi militants in Yemen, while the recently announced Russia-Ukraine “energy ceasefire” has already been violated. These developments have kept oil prices elevated, fueling inflation concerns and increasing expectations of further interest rate hikes.

Gold prices eased to around $4,170 an ounce on Monday after reaching a one-week high earlier in the session, as a firm US dollar weighed on bullion and investors awaited key inflation data that could influence the Federal Reserve’s interest-rate outlook. The dollar remained near its strongest level in 18 months, supported by tensions in the Middle East and caution ahead of this week’s US consumer and producer price reports and retail sales data. Stronger-than-expected readings could reinforce expectations of tighter monetary policy, pushing Treasury yields and the dollar higher and placing further pressure on gold. Markets have scaled back expectations for a Fed rate hike this month, with traders pricing in less than a 20% probability of an increase, while assigning an 85% chance of a hike by December, according to CME’s FedWatch tool. Investors will also monitor this week’s IMF-World Bank annual meetings for further signals from global central bankers on the monetary policy outlook.