Gold prices saw a slight decline on Tuesday as the US dollar maintained its strength. The drop came as markets anticipated key US inflation data, which could provide clues about the Federal Reserve's future interest rate decisions. Spot gold fell 0.2% to $4,164.45 per ounce, while US gold futures for December delivery dipped 0.1% to $4,187.90.
The US dollar remained near an 18-month high, making gold and other dollar-denominated metals more expensive for foreign investors. The Consumer Price Index (CPI) report is set for Wednesday, followed by the Producer Price Index (PPI) on Thursday. Analysts believe the CPI data will be crucial for gold's short-term performance.
Kyle Rodda, senior financial market analyst at Capital.com, noted that if inflation exceeds expectations, especially on the core measure, it could raise the likelihood of a Fed rate hike in October, potentially pushing gold prices lower. Higher interest rates typically drive investors toward yield-bearing assets rather than gold. Currently, traders see only a 21% chance of a rate hike this month but an 88% chance for December, according to CME's FedWatch tool.
On the geopolitical front, Saudi Arabia reported new incoming fire, keeping Riyadh airport shut after a recent missile attack. Among other precious metals, silver, platinum, and palladium all saw minor declines.