Futures & Commodities

Gold tracks dollar in choppy session; U.S. inflation data awaited

Key Points
  • Spot gold rose 0.3% to $1,828.74 per ounce by 13:44 p.m. ET.
  • U.S. gold futures settled 0.2% higher at $1,830.80.
A five hundred gram gold bar, left, and a a one kilogram gold bar, produced by Swiss manufacturer Argor Hebaeus SA, in Budapest, Hungary, on Wednesday, July 20, 2016.
Akos Stiller | Bloomberg | Getty Images

Gold prices climbed to their highest level since early September on Tuesday in tandem with a softer dollar, as investors awaited U.S. inflation data scheduled for later in the week.

Fundamentals

Spot gold rose 0.3% to $1,828.74 per ounce by 13:44 p.m. ET, having earlier recorded its highest since Sept. 3 at $1,831.10.

U.S. gold futures settled 0.2% higher at $1,830.80.

The U.S. dollar, which gold has been tracking through the session, inched lower against its rivals, making the bullion less expensive for holders of other currencies.

"Investors are cautious near $1,830-$1,835 as we have not been able to breach that to the upside in July and August," said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

Key central banks last week indicated interest rates would remain low in the near term, boosting the appeal of non-yielding gold and helping the metal post its best week since late August.

However, a tight U.S. labour market and the dislocation in global supply chains could result in a high reading for U.S. consumer prices due on Wednesday.

"If the market sees the consumer price index number is above expectations then the argument will certainly go that the Federal Reserve must now hike quicker," Quantitative Commodity Research analyst Peter Fertig said. But "the Fed is not following a rule book," he added.

Also buoying gold, yields on the 10-year Treasury notes slipped to 1.4271%.

"Gold prices are on the cusp of a breakout," TD Securities analysts said in a note. "Considering the extremely poor sentiment in precious metals across the last few months, the bar is low for prices to slice through trendline resistance."

Elsewhere, spot silver declined 0.8% to $24.25 per ounce, platinum slipped 0.1% to $1,054.64 and palladium fell 2.4% to $2,021.35.