Gold Edges Higher Ahead of Key Inflation Data

Gold prices edged higher on Tuesday, reaching their highest level since June 5 at $4,434.84 per ounce before dipping to $4,393.69. The market is looking ahead to this week's inflation data for confirmation that inflation is in check, said Peter Grant, vice president and senior metals strategist at Zaner Metals.

The U.S. consumer price report due on Wednesday and producer price data on Thursday are likely to shape monetary policy expectations after weak July U.S. jobs data led markets to scale back bets that the Fed would raise rates next month. As a result, gold experienced a 2.4% daily gain last week.

Despite traders pricing in about a 48% chance of a September hike and a 78% chance in December, according to the CME FedWatch Tool, gold remains fairly well bid at this point. A higher interest rate environment tends to reduce the appeal of non-yielding gold.