Gold Nears 1-Week High as Investors Eye Crucial U.S. Inflation Data for Clues on Fed’s Next Move

Gold prices slightly dipped on Tuesday but stayed close to a one-week high as investors await key U.S. inflation data that could influence the Federal Reserve’s next policy decision.

Key Points:

• Gold Movement: Spot gold dropped by 0.2% to $2,466.69 per ounce early Tuesday, after reaching its highest point since August 2 earlier in the session. U.S. gold futures, however, rose slightly by 0.1% to $2,506.90.
  
• U.S. Inflation Data: Traders are focused on the July U.S. producer price index (PPI) report, expected later today, and the consumer price index (CPI) report on Wednesday. These reports may reveal a 0.2% month-on-month increase in both headline and core prices.
  
• Interest Rates: There’s about a 50% chance that the Federal Reserve might cut interest rates by 50 basis points in September. Lower interest rates usually make gold more attractive as it doesn’t yield interest.
  
• Gold Holdings: SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, reported a 0.34% increase in holdings, now totaling 849.79 metric tons.
  
• U.S. Budget Deficit: The U.S. government reported a $244 billion budget deficit for July, up 10% from the previous year, though it would have been $45 billion less if not for calendar differences.
  
• Geopolitical Tensions: Israeli Prime Minister Benjamin Netanyahu had a public disagreement with his defense minister, highlighting ongoing internal conflicts as tensions in Gaza threaten to escalate into a wider regional conflict.
  
• Other Metals: Spot silver fell by 0.5% to $27.8607 per ounce, platinum inched up by 0.2% to $938.55, and palladium dropped 0.4% to $917.10.