Gold Slips, Investors Await US CPI Data at $4,065 an Ounce
Spot gold slipped 0.1% to $4,065.58 an ounce in Singapore trading as investors awaited US consumer price data. Strong jobs figures have reinforced bets that the Federal Reserve will raise interest rates at its December meeting, pressuring the non-yielding metal.
Spot gold slipped 0.1% to $4,065.58 an ounce at 7:35 a.m. in Singapore, as gold slips and investors await US inflation data that could shape the Federal Reserve's next move on interest rates.
Silver fell 0.2% to $51.81. Platinum and palladium edged higher.
Strong jobs data weighs on bullion
Gold had already retreated late last week. It fell 0.4% on Friday and traded around $4,070 an ounce after US job growth surged in October and the unemployment rate edged lower.
Separate data showed US consumer sentiment rose in early November to a three-month high. Together, the figures point to strength in an expanding economy.
That strength has reinforced expectations that the Fed will seek to raise interest rates to combat inflation. Officials will see one more jobs report and a full slate of inflation data before their next meeting in December, where they are expected to hike rates. Stubbornly high energy prices are weighing on prices.
Higher rates hurt gold because the metal pays no interest. When rates rise, assets that do pay interest become more attractive by comparison.
Dollar caps the upside
The Bloomberg Dollar Spot Index, a gauge of the US currency, rose 0.4% in the previous session. A stronger dollar makes gold more expensive for buyers holding other currencies.
Gold rebounded above the $4,000-an-ounce support threshold after the US midterm elections. Treasury yields and oil fell on bets that incoming Democrats would push to end the Iran war, and that a divided government would limit further spending and borrowing.
The metal is still down about a fifth since the US-Iran conflict erupted in late February.
CPI is the next test
Traders will look to monthly consumer price index data, due Tuesday, for fresh clues on the path for interest rates. The report measures how quickly the prices households pay are rising.
Hebe Chen, market analyst at Vantage Global Prime, said gold's post-midterm moves have put two competing forces in sharp focus. "Its safe-haven appeal remains intact, but the dollar continues to keep a tight lid on its upside," she said.
She called the inflation report "the next battleground, testing whether safe-haven demand can muster enough firepower to break through the dollar-driven ceiling."
