Bullion Market Forecast: Gold gained as the dollar continued to retreat from a record high ahead of US inflation data that could bear on the Federal Reserve’s monetary policy.
The metal rose as much as 0.6% as the greenback slipped for a second day, providing relief to commodities priced in the currency. Bullion has found a floor near $1,700 an ounce this month after slumping in August on the dollar’s rally.
Economists forecast the August inflation figure would slow for the second month in a row to 8.1%, potentially easing pressure on the US central bank to keep aggressively hiking rates. Still, officials last week seemed to point to another super-sized increase of 75 basis points in September. Fed Governor Christopher Waller said Friday he favored “another significant” increase.
“Gold has once again bounced back after taking support near $1,700/oz, but may struggle with the Fed’s continuing emphasis on aggressive tightening,” said Ravindra Rao, head of commodity research at Kotak Securities Ltd.
The European Central Bank lifted rates by 75 basis points last week, and is prepared to do the same when the committee meets in October, said people familiar with the debate. The move is supporting the euro against the dollar, providing some relief for bullion.
Spot gold rose 0.6% to $1,726.27 an ounce at 10:25 a.m. in London from its close on Friday. The Bloomberg Dollar Spot Index slid 0.6%, after posting its first weekly drop in four. Silver, platinum and palladium all gained.
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