Gold Awaits US Inflation Data as Prices Rally Above $4,400
Gold prices have recovered from one-week lows near $4,350 and are now trading above $4,400.
The precious metal is finding support from the US Treasury Department's measure to rescue the bond market, with plans to raise its bond buybacks to up to $6 billion for an operation due on Thursday.
However, despite this intervention, US Treasury bond yields rose further but were volatile, with long-dated securities increasing as much as 5 basis points each before easing.
The US inflation test is set to begin on Thursday and Friday, with the Producer Price Index (PPI) and Consumer Price Index (CPI) data due respectively. The market is awaiting these figures to determine whether the energy-driven inflation impact is substantial enough for the Federal Reserve (Fed) to raise interest rates next week.
TD Securities notes that precious metals are in a holding pattern, with inflation data being the next big catalyst. Strategists warn that an upside surprise would embolden Fed pricing and weigh on gold, while less worrisome inflation could be the first catalyst for discretionary positioning.