Gold Pauses Near $4,400 as Traders Watch US Inflation Data for Fed Rate-Hike Signals
Summary
- Gold was little changed near $4,400 an ounce, while some investors are again turning to gold as a long-term portfolio hedge.
- Rising U.S. 10-year Treasury yields, higher oil prices, and inflation concerns stemming from Middle East tensions are acting as short-term headwinds for gold prices.
- Markets are looking to this week's U.S. PPI and CPI data for clues on the likelihood of a Fed rate increase, with the swaps market currently pricing in about a 65% chance.
Forecast Trend Report by Period
Gold held steady near $4,400 an ounce as markets looked ahead to U.S. inflation data due this week for clues on whether the Federal Reserve will raise interest rates.
Bloomberg reported that spot gold was little changed at $4,400.32 an ounce as of 7:22 a.m. in Singapore on September 10. Bullion rose 1% in the previous session, snapping a three-day losing streak.
Gold has traded in a narrow range around $4,400 in recent weeks after rebounding from near $4,000 an ounce in July. Some investors have renewed interest in the metal as a long-term portfolio hedge, but rising Treasury yields and inflation concerns tied to Middle East tensions are weighing on prices in the short term.
The yield on the U.S. 10-year Treasury rose again. Yields climbed even after the Treasury Department expanded long-term bond buybacks to as much as $6 billion, as the move fell short of market expectations. Higher Treasury yields are typically a negative for gold because the metal does not pay interest.
Oil prices are also a factor. Brent crude climbed above $100 a barrel for the first time since July, while Iran warned it would escalate the war if the U.S. continued attacks on its territory and infrastructure. Continued disruption to energy supplies in the Middle East could add to inflation pressure.
Markets are focused on this week's U.S. producer price index and consumer price index reports, key gauges for the rate outlook ahead of the Fed's policy meeting on September 14-15. The swaps market is currently pricing in about a 65% chance of a rate increase.
At the same time, silver was little changed at $67.29 an ounce after rising 2.4% the previous day. Platinum and palladium edged higher, while the Bloomberg Dollar Spot Index fell 0.1%.
