Gold edges higher ahead of US inflation data as rate cut bets build

Gold prices inched higher on Tuesday, recovering some ground after a steep sell-off in the previous session, as investors awaited key US inflation data that could shape the Federal Reserve’s interest rate path. As per Reuters, spot gold rose 0.2 per cent to $3,350.03 per ounce at 0146 GMT, while US gold futures for December delivery were steady at $3,402.80. This followed Monday’s sharp losses, when spot prices fell 1.6 per cent and futures dropped over 2 per cent after US President Donald Trump said imported gold bars would not be subject to tariffs — easing fears that had rattled bullion markets.

CPI data in focus

Market attention is now on the US consumer price index (CPI) report due at 1230 GMT. Economists polled by Reuters expect core CPI to have risen 0.3 per cent in July, lifting the annual rate to 3 per cent, still well above the Fed’s 2 per cent target. “Market participants now will be definitely focusing on the upcoming Fed rate cut, which has been more or less priced in for September,” OANDA senior market analyst Kelvin Wong told Reuters.

“If we start to see the core CPI data come in slightly below expectations, that could further support this rate cut outlook." Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold. Wong also noted that long-term US Treasury yields remain capped below key resistance levels, which could provide additional support for bullion.

Political backdrop and Fed pressure

According to Reuters, traders are pricing in about an 85 per cent chance of a Fed rate cut in September, as per CME’s FedWatch tool. Gold tends to perform well during periods of policy easing and market uncertainty.

Trump has repeatedly criticised the Fed for not cutting rates more aggressively, and markets are also watching who he will nominate to succeed current Chair Jerome Powell when his term ends in May next year.

Meanwhile, a White House official confirmed to Reuters that Trump had signed an executive order on Monday extending a pause in sharply higher US tariffs on Chinese imports for another 90 days, a move that could ease fears of renewed trade tensions and reduce safe-haven demand.

Broader precious metals market

In other precious metals, spot silver gained 0.6 per cent to $37.81 per ounce, platinum rose 0.6 per cent to $1,334.24, and palladium climbed 0.7 per cent to $1,143.93, according to Reuters data.

While Trump’s assurance that bullion imports would not face US tariffs calmed some market nerves, traders are still awaiting formal clarification following a recent federal court ruling that caused uncertainty in the sector.

(With inputs from the agencies)