Gold climbs as US inflation data takes centre stage this week

Sept 11 – Gold prices rose on Monday, supported by a sharp retreat in the dollar as investors look forward to US inflation data that could sway the Federal Reserve to raise interest rates later in the year.

Spot gold jumped 0.5% to USD 1,927.09 per ounce by 0749 GMT, while US gold futures GCcv1 rose 0.4% to USD 1,950.80.

Gold should be supported above the USD 1,900 level if we see the U.S. dollar continue to decline on bets that the Fed are indeed done with their tightening cycle, said Matt Simpson, a senior analyst at City Index.

Gold had found support around its 200-day moving average, an important technical level not easy to crack, he said, adding that if U.S. inflation undershoots that could weigh further on the dollar.

The US Consumer Price Index (CPI) data for August due on Wednesday is expected to shape the Fed’s interest rate decisions this year.

KCM Trade Chief Market analyst Tim Waterer said the inflation numbers could creep to the upside courtesy of ascending energy prices, which will keep alive the odds of another 25-basis-point (bps) move by the Fed come November.

Ahead of their policy-setting meeting this month, Fed policymakers have been pretty clear about two things: they are not itching to raise interest rates, but few among them are ready to declare victory, either.

The U.S. dollar dropped 0.5% and benchmark 10-year bond yields shed 0.3%, making non-yielding bullion more attractive for overseas buyers. 

“The precious metal will likely be relying on a pullback in yields in order to again challenge the USD 1,950 level,” Waterer said in a note.

Spot gold may retest a resistance at USD 1,930 per ounce, according to Reuters technical analyst Wang Tao.

Elsewhere, spot silver jumped 1% to USD 23.14 per ounce, platinum added 0.9% to USD 900.95 after a 7% decline last week, and palladium edged 0.8% higher to USD 1,207.19.

(Reporting by Swati Verma in Bengaluru; Editing by Sherry Jacob-Phillips, Subhranshu Sahu and Janane Venkatraman)