Gold edges lower as focus shifts to US inflation data

Gold prices eased on Tuesday as investors took profits after bullion’s more than 1% rally in the previous session and awaited US inflation data for clues on the Federal Reserve’s policy path.

Spot gold was down 0.6% at $4,114.48 per ounce, as of 0430 GMT.

US gold futures for December delivery edged 0.2% higher to $4,123.50.

“It’s just a bit of churn in the market.

Prices are easing back from the highs reached during the US session, which could be attributed to profit-taking,“ said Kyle Rodda.

“If we continue to see a situation where the US does not want to escalate the conflict in the Middle East and oil prices are reversing as a result, that’d be very beneficial for gold because of its impact on the dollar, inflation and interest rate expectations,” Rodda said.

US President Donald Trump said on Monday he plans to hold off on new military strikes against Iran for the time being after appeals from countries in the region, including from Qatar’s prime minister in White House talks.

Oil prices fell on Tuesday, extending losses from the previous day.

Meanwhile, the US central bank should move its monetary policy “with care” as it maps a response to inflation that remains its greatest risk, Richmond Federal Reserve President Tom Barkin said on Monday, adding he had no base case for what should be done at the December meeting.

Traders currently see an 84% chance that the US Fed will raise rates in December, according to CME’s FedWatch tool.

Higher interest rates increase the opportunity cost of holding non-yielding bullion, reducing its appeal to investors.

Investors now await the consumer price index report, due later in the day, followed by the producer price index data on Friday.

Among other metals, spot silver slid 0.5% to $53.14 per ounce, platinum steadied at $1,576.44 and palladium dropped 0.2% to $1,039.47.