Dollar Drop Fuels Brief Gold Rally Ahead of Inflation Data

Gold prices surged on Tuesday after a softer US dollar helped bullion recover from two sessions of losses. Spot gold gained 0.6% to $4,429.89 an ounce in early Asian trading, while December US gold futures were little changed at $4,475.10.

The dollar index fell about 0.4%, making bullion cheaper for buyers using other currencies. This brief reprieve offered immediate support after gold came under pressure from Friday's jobs report, which showed US employers added 162,000 jobs in August and unemployment held at 4.1%.

Analysts see the inflation releases as key to deciding whether the Federal Reserve raises rates next week. A hotter reading would strengthen the argument for another increase in borrowing costs, potentially pushing Treasury yields and the dollar higher again.

Société Générale analysts believe gold's rally is increasingly broad-based, with support extending across institutional investors, derivatives markets, and central-bank demand rather than relying solely on speculative buying. Geopolitical tensions involving the US and Iran are providing another layer of defensive demand.