Gold Prices: Bullion Slips as Investors Book Profits Ahead of US Inflation Data

Gold prices declined on Tuesday as investors booked profits following gains of more than 1% in the previous session, while markets awaited key US inflation data for clues about the Federal Reserve’s next interest rate decision.

Spot gold fell 0.4% to $4,124.42 per ounce as of 0618 GMT. In contrast, US gold futures for December delivery rose 0.5% to $4,133 per ounce.

The decline in spot prices followed Monday’s rally, as investors adjusted their positions ahead of the US consumer price index (CPI) report, scheduled for release at 1330 GMT.

Kyle Rodda, senior financial market analyst at Capital.com, attributed the pullback to profit-taking after bullion reached higher levels during the previous US trading session.

Gold investors were also monitoring developments in the Middle East after US President Donald Trump indicated on Monday that Washington would refrain from further military strikes against Iran for the time being, following diplomatic appeals from regional countries, including Qatar.

Oil prices extended their decline on Tuesday, potentially easing inflationary pressures and influencing expectations for US monetary policy.

Analysts said reduced geopolitical tensions and lower energy prices could eventually support gold by influencing the US dollar and interest rate expectations.

Meanwhile, Richmond Federal Reserve President Tom Barkin urged caution in monetary policy decisions, identifying inflation as the central bank’s primary concern without signalling a preferred course of action for December.

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According to CME’s FedWatch tool, traders currently assign an 84% probability to a Federal Reserve interest rate increase in December.

Higher interest rates generally weigh on gold by increasing the opportunity cost of holding the non-yielding metal, making interest-bearing assets more attractive.

Investors are also awaiting US producer price index (PPI) data scheduled for Friday, which could provide further insight into inflation trends.

Among other precious metals, spot silver declined 0.3% to $53.22 per ounce, while platinum remained unchanged at $1,577.57. Palladium slipped 0.2% to $1,039.16 per ounce.