Gold Holds Steady as Traders Await US Inflation Data Release
Gold prices have held steady above $4,400 as traders remain cautious ahead of the US inflation data release. The USD remains depressed due to the Bank of Japan's (BoJ) inspired Japanese Yen (JPY) rally, which has lent support to gold prices.
The upcoming US Producer Price Index (PPI) report on Thursday and Consumer Price Index (CPI) on Friday will provide crucial cues about the Federal Reserve's policy path. This, in turn, is expected to influence USD price dynamics and impact gold prices.
Markets have priced in around a 60% chance of a Fed rate hike at its upcoming meeting on September 15-16, following the better-than-expected US Nonfarm Payrolls report last Friday. Rising inflation risks, driven by higher energy prices, are also supporting prospects for immediate Fed tightening.
The geopolitical risk premium remains firmly in place due to escalating tensions between the US and Iran, which has pushed crude oil prices to a fresh three-month high. This is further backing the case for a more hawkish stance from other major central banks.