Dollar Dips, But Inflation Data Set to Decide Gold's Next Move
Gold prices rose on Tuesday due to a softer US dollar, which helped bullion recover from two sessions of losses. Spot gold gained 0.6% to $4,429.89 an ounce in early Asian trading.
The dollar index fell about 0.4%, making bullion cheaper for buyers using other currencies. This came after stronger-than-expected US payrolls revived expectations for tighter monetary policy, pushing markets to assign roughly a 60% probability to a September Fed increase.
Ole Hansen, Saxo Bank commodity strategist, noted that the employment report lifted bond yields and reinforced expectations of a September rate rise, creating pressure on gold. However, Tuesday's weaker dollar interrupted this pressure, but has not removed the underlying rate risk.
Attention now turns from employment to inflation, with the Bureau of Labor Statistics set to release August producer prices on Thursday followed by consumer prices on Friday. The Fed then holds its policy meeting on September 15-16.