Gold holds ground with spotlight on US inflation data

Gold inched higher on Tuesday (Jul 15) as traders awaited the release of US inflation data later in the day that could shed more light on the Federal Reserve’s interest rate path.

Spot gold was up 0.1 per cent at US$3,348.35 per ounce, as at 0101 GMT. US gold futures were steady at US$3,357.30.

Traders’ focus now shifts to US consumer price data for June, due at 1230 GMT on Tuesday.

Economists polled by Reuters expect headline inflation to increase to 2.7 per cent on an annual basis, up from 2.4 per cent in the prior month. Core inflation is expected to rise to 3 per cent, from 2.8 per cent.

US President Donald Trump on Monday renewed his attacks on Fed chair Jerome Powell, saying interest rates should be at 1 per cent or lower.

Powell has said that he expects inflation to increase this summer as a result of tariffs, which is seen keeping the US central bank on hold until later this year.

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Trump on Saturday threatened to impose a 30 per cent tariff on imports from Mexico and the European Union starting on Aug 1, after weeks of negotiations with the major US trading partners failed to reach a comprehensive trade deal.

Markets are pricing in 50 basis points of rate cuts by year-end, with the first reduction expected in September.

Gold, often considered as a safe-haven asset during times of economic uncertainties, tends to do well in a low-interest-rate environment.

Fed Bank of Cleveland president Beth Hammack said on Monday she sees no imminent need to lower rates right now, given that inflation is still too high.

Spot silver gained 0.1 per cent to US$38.15 per ounce, after hitting its highest level since September 2011 on Monday. Platinum eased 0.1 per cent to US$1,362.55 and palladium slipped 1 per cent to US$1,182.25. REUTERS