WASHINGTON: Gold hits two-month high on Tuesday, rising for a third straight session as investors await key US inflation data for clues about the Federal Reserve’s interest-rate outlook. Gold prices rise as markets weigh lower-rate expectations and renewed safe-haven demand.
Spot gold rose 1% to $4,432.74 an ounce by 0217 GMT. It earlier reached its highest level since June 5. U.S. gold futures gained 1.7% to $4,492.60.
Tony Sycamore, a market analyst at IG, said the rally reflected investor FOMO, short-covering by speculative traders and renewed safe-haven demand.
Sycamore said gold could move higher in the medium term. He expects the rally to pave the way for a stronger recovery toward $5,000 an ounce.
Markets are now focused on US consumer price data due on Wednesday and producer price data due on Thursday.
The reports could shape expectations for the Federal Reserve’s next policy move. Weak July jobs data last week prompted traders to reduce bets on a rate hike next month.
The Fed kept interest rates unchanged at its July meeting. Three officials dissented and backed a rate increase.
Lower interest rates tend to support gold because bullion does not pay interest.
Fawad Razaqzada, a market analyst at Forex.com, said cooling economic data without a renewed rise in inflation could further reduce expectations for tighter monetary policy.
A weaker dollar could then provide additional support for gold, he said.
Geopolitical tensions also boosted demand for safe-haven assets. US President Donald Trump responded to Iran’s conditions for a peace deal by demanding compensation for people killed in wars, attacks and protests.
The comments could complicate efforts to reopen the Strait of Hormuz.
Among other precious metals, spot silver rose 0.9% to $66.30 an ounce. Platinum gained 0.7% to $1,765.26, while palladium climbed 0.8% to $1,394.00.
