Gold firms on dollar dip as US inflation test looms

Sept 11 – Gold edged up on Monday on a retreat in the dollar, with the focus still squarely on US inflation readings and their likely influence on the Federal Reserve’s interest rate trajectory.

Spot gold climbed 0.2% to USD 1,921.10 per ounce by 2:36 p.m. EDT (1836 GMT), while US gold futures settled 0.2% higher at USD 1,947.20.

The dollar index fell 0.5%, making gold less expensive for other currency holders.

Capping zero-yield gold’s uptick, however, yields on the benchmark 10-year Treasury note edged higher.

Traders were mostly positioning for the US consumer price data (CPI) on Wednesday, given its potential influence on whether the Fed may put rates on hold.

“Gold has started the week on a positive note on some dollar weakness, but prices will likely face some pressure in the near-term with the market expecting one more rate hike this year,” said Edward Moya, senior market analyst at OANDA.

“I don’t think we’ll be getting the green light for investors to become aggressive and getting back into the precious metal very soon.”

According to the CME FedWatch tool, traders predicted a 93% chance of Fed leaving rates unchanged at their Sept. 19 to 20 policy meeting. But the odds also suggested a 41% chance of a hike in November.

Ahead of their next meeting, Fed policymakers have been clear that they are not itching to raise rates, but few among them are ready to declare victory.

For gold futures to climb above USD 2,000 per ounce, the Fed needs to be less hawkish and the dollar index and Treasury yields need to back off, said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

Silver jumped 0.7% to USD 23.07 per ounce. Platinum added 0.6% to USD 897.79 per ounce and palladium gained 1.3% to USD 1,213.95.

(Reporting by Harshit Verma, Ashitha Shivaprasad, and Brijesh Patel in Bengaluru; Editing by Josie Kao)