Gold lingers near one-week low ahead of US CPI data

Synopsis

As U.S. rate hike expectations firmed up, gold prices remained near a one-week low. The market is gearing up for the pivotal U.S. consumer price index data set to be unveiled later today, heightening anticipation. Speculation swirls around a potential increase in borrowing costs by the Federal Reserve in its next meeting. Additionally, the European Central Bank has raised rates to tackle inflation driven by energy.

Gold prices lingered near a one-week low on Friday as expectations of a U.S. rate hike strengthened, with attention turning to U.S. consumer price index data due later in the day.

FUNDAMENTALS

Spot gold held nearly steady at $4,318.88 per ounce, as of 0020 GMT, after hitting its lowest level since September 2 earlier. Prices fell ‌nearly 2% on ⁠Thursday ⁠after U.S. producer prices increased as expected in August.

U.S. gold futures for December delivery ​were down 1.1% at $4,359.50.

The Federal Reserve is a bit more likely to raise short-term borrowing costs at its meeting next week, traders bet on Thursday, after the first of this week's key inflation reports.

The Producer Price Index ​for final demand rose 0.4% last month after an ⁠upwardly revised ‌0.1% gain in July, the Labor Department's Bureau of ​Labor Statistics ​said.

The U.S. consumer price index data is due ⁠at 1230 GMT.

Meanwhile, the European Central Bank ​raised rates for the second time this year to quell ​an energy-driven inflation rise and warned that price pressures could prove lasting, fuelling bets on more policy tightening as soon as October.

Despite gold being known as an inflation hedge, rising interest rates often pressure the metal, which offers no yield.

Iran-aligned Houthis seized control of Yemen's ‌port city of Mocha on Thursday and advanced down the Red Sea coast to strategic islands, military sources said, hours after ​President Donald Trump ​said he expected ⁠the Iran war to end after the U.S. midterm elections.

Among other metals, spot silver fell 0.1% at $63.48, platinum steadied at $1,777.42 and palladium lost 0.2% to $1,279.25.

DATA/EVENTS (GMT)

0600 UK ​GDP Est 3M/3M Jul

0600 UK GDP Estimate MM, YY Jul

0600 UK Services MM, YY Jul

0600 UK Manufacturing Output MM Jul

1230 US Core CPI MM, SA Aug

1230 US Core CPI YY, NSA Aug

1230 US CPI MM, SA Aug

1230 US CPI YY, NSA Aug

1230 US CPI Wage Earner Aug

1400 US U Mich Sentiment Prelim Sep

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