Gold Prices Rebound Amid Weaker Dollar, Inflation Data Looms

Gold prices rebounded on Tuesday as the US dollar weakened, offering temporary relief to bullion after two consecutive sessions of losses. Spot gold gained 0.6% to $4,429.89 an ounce in early Asian trading, while December US gold futures remained relatively stable at $4,475.10.

The softer US dollar made gold cheaper for buyers using other currencies and interrupted the pressure on bullion caused by Friday's stronger-than-expected US payrolls report. The jobs data added 162,000 jobs in August, with unemployment holding steady at 4.1%, according to the Bureau of Labor Statistics.

Ole Hansen, Saxo Bank commodity strategist, noted that the stronger employment report had lifted bond yields and reinforced expectations of a September rate rise, putting pressure on both gold and silver. However, the dollar's retreat offered immediate support for gold after it came under pressure from the jobs data.

Attention now shifts to inflation data, with the Bureau of Labor Statistics set to release August producer prices on Thursday followed by consumer prices on Friday. A hotter reading would strengthen the argument for another increase in borrowing costs, potentially pushing Treasury yields and the dollar higher again.