Gold prices slipped in early Asian trade on Tuesday as investors waited for United States inflation figures due later in the day. The data could offer clues on the Federal Reserve’s next move on interest rates.
Spot gold fell 0.3% to $4,128.48 an ounce by 0024 GMT. The metal had climbed more than 1% in the previous session, helped by a drop in oil prices. US gold futures for December delivery rose 0.6% to $4,137.60.
Oil and geopolitics
Crude prices have been falling sharply. Brent crude futures kept sliding after Monday’s settlement, shedding more than $7 a barrel and touching their lowest level since late August.
The fall followed comments from US President Donald Trump on Monday. He said he plans to hold off on fresh military strikes against Iran for now. He made the decision after appeals from countries in the region, including Qatar’s prime minister, who met him for talks at the White House.
Lower oil prices ease worries about fuel-driven inflation, which is one reason gold has been firm recently.
Rate expectations
Markets are betting heavily on a rate increase. Traders currently put an 84% chance on the Fed raising rates at its December meeting, according to CME’s FedWatch tool.
Higher interest rates make it more costly to hold gold, which pays no interest or dividend. Investors can earn returns elsewhere, so bullion becomes less attractive.
Richmond Federal Reserve President Tom Barkin struck a cautious tone on Monday. He said the central bank should move carefully as it works out how to respond to inflation, which he described as its biggest risk. He also said he had no base case for what should be done at the December meeting.
Inflation data in focus
The US consumer price index (CPI) report is scheduled for 1330 GMT on Tuesday. It will be followed by the producer price index (PPI) data on Friday. Traders will watch both closely, as they will shape expectations for the Fed’s next decision.
Other metals
Precious metals outside gold also eased. Spot silver slipped 0.3% to $53.25 an ounce. Platinum dipped 0.3% to $1,572.28, while palladium dropped 0.9% to $1,032.21.
Asia’s central banks
In Japan, some Bank of Japan policymakers have called for faster interest rate hikes. They argued that underlying inflation has reached the central bank’s 2% target. A summary of opinions from the bank’s October meeting, released on Tuesday, showed the views.
Chinese data
Chinese economic figures are also due at 0800 GMT on Tuesday. These include October data on total social financing, M2 money supply and new yuan loans. China’s exports, imports and trade balance for October are also on the calendar, though no release time was given.