Gold Prices Rebound on Weaker USD, Await Crucial US Inflation Data
Gold prices regained some traction on Tuesday as the US Dollar extended its decline against the Japanese Yen. The safe-haven commodity, however, faces limited upside due to hawkish Federal Reserve expectations and ongoing geopolitical tensions.
The USD's pullback from a three-week high gained momentum amid the JPY rally. However, traders seem hesitant ahead of this week's key US inflation data, with the Producer Price Index (PPI) due on Thursday and the Consumer Price Index (CPI) on Friday.
Strategists at OCBC note that the recent US payrolls report reinforced the resilience of the US economy and kept the risk of Fed tightening alive. While this may restrain USD downside, they expect markets to require firmer inflation evidence before pricing a September rate hike with greater conviction.