Gold Waits on US CPI as Oil Adds Inflation Pressure
Gold prices edged up to $4,377.79 an ounce as traders waited for the US inflation report due at 1230 GMT. The precious metal is closely tied to interest rates, and a higher CPI reading could push real yields up, making bonds and cash more attractive than bullion.
The market is split on the Federal Reserve's next move, with implied odds of a September hike down to about 48% after a softer jobs report. However, rising oil prices due to Middle East tensions have added inflation pressure, which could lift inflation expectations and strengthen the case for higher interest rates.
The US CPI release is not just about the headline number; it's also influenced by the impact of pricier energy on broader inflation. A hotter print that keeps September hike odds elevated can push real yields higher, raising the opportunity cost of holding gold.