Gold gains for third session as US inflation data takes center stage

Gold is consolidating gains for a third straight session after touching a more-than-two-month peak at $4,434.84 per ounce. Investors are now eyeing Wednesday’s CPI and Thursday’s PPI prints to gauge the Federal Reserve’s rate trajectory ahead of the September 15-16 FOMC meeting.

A two-month peak followed by consolidation

Spot gold hit a more-than-two-month high of $4,434.84 per ounce on Tuesday, its strongest level since June 5, before pulling back late in the session. On Monday, August 10, the yellow metal had already touched a seven-week high — a level unseen since June 17 — fueled by US employment data that came in well below expectations. Spot gold stood at $4,322.28/oz on Monday at 02:00 GMT (-0.5%), then at $4,371.92/oz on Tuesday (-0.4%). US gold futures settled at $4,381.60 on Monday and at $4,430.80 on Tuesday, up 0.3%.

« Gold is pulling back slightly as it succumbs to profit-taking after solid gains inspired by last week’s non-farm payrolls, » said Tim Waterer, chief market analyst at KCM Trade. « This looks like natural stabilization rather than any meaningful shift in sentiment. I expect gold to remain supported above the $4,300 level in the near term. »

Treasury yields: the brake on the rally

US 10-year Treasury yields climbed to a more-than-one-week high, raising the opportunity cost (the yield available elsewhere on risk-free assets) of holding gold, a metal that pays neither coupons nor dividends. The rise in real yields mechanically caps the appeal of bullion versus fixed-income alternatives.

« Middle East uncertainty remains a persistent risk factor, as any resurgence of tensions that pushes oil prices higher could quickly weigh on the yellow metal. »

Tim Waterer, chief market analyst at KCM Trade

Market expectations for a Fed rate hike in September firmed after the revisions to the jobs data. According to the CME FedWatch tool, traders now price a 52% probability of a September rate hike, up from 44% on Monday. The probability of a hike at the July meeting had fallen to 25.1%, versus 74.9% for a hold, based on market prices as of July 10. Cleveland Fed Governor Beth Hammack said Monday she believed « the time had come to begin raising interest rates gradually » to avoid sharper increases later on.

Oil and the Middle East: a geopolitical wildcard

Oil prices climbed Tuesday after President Donald Trump responded to Iran’s conditions for a possible peace deal by demanding that Tehran pay compensation for people killed in wars, attacks and protests. The rhetoric stoked concerns about the reopening of the Strait of Hormuz, through which a significant share of global crude flows.

« Rising oil prices have lifted US Treasury yields, which is weighing on gold prices, » said Hamad Hussain, commodities economist at Capital Economics. Iran said it was nearing a final agreement with Oman outlining new maritime routes through the strait, while reiterating that the United States must meet several conditions before reopening this strategic waterway.

CPI and PPI: the catalysts that will set the path

Investors are now looking ahead to two key releases: the US Consumer Price Index (CPI) on Wednesday, followed by the Producer Price Index (PPI) on Thursday. Both indicators will provide direct insight into the disinflation trajectory and, by extension, the Fed’s calendar.

According to Hamad Hussain, a hotter-than-expected CPI could justify a rate hike at the next FOMC meeting and pile further pressure on gold. Conversely, Tim Waterer argued that « soft readings would strengthen the case for a hold and clear the path toward fresh bullish prospects for gold. » Recall that the US economy unexpectedly lost jobs in July, while the previous two months’ payrolls were heavily revised downward — a turn that pushed September hike probabilities from above 50% to below 50%.

The rest of the metals complex: silver and platinum under pressure

Caution has also spread to the rest of the precious metals complex. On Monday, spot silver slipped 0.2% to $63.45/oz, platinum eased 0.1% to $1,742.50, while palladium fell 1.1% to $1,362.97. Palladium’s weakness reflects soft industrial demand, particularly from the automotive sector where it is used in catalytic converters.

The table below summarizes the session’s prices and changes:

Conclusion: profit-taking versus structural support

Gold is trading in a fragile equilibrium, caught between technical profit-taking and structural support tied to monetary policy expectations. The psychological $4,300/oz level appears to be holding, but the trajectory over the coming days will depend almost entirely on the CPI and PPI prints. Three scenarios are emerging: a soft CPI would rekindle the rally toward $4,450 and beyond, an in-line CPI would maintain the current range, while a hotter-than-expected CPI would tip FedWatch probabilities toward a near-certain hike and push gold toward $4,250.

The geopolitical factor remains a wild card: any escalation around the Strait of Hormuz could simultaneously push oil, yields, and gold into a chaotic configuration. In any case, implied volatility on bullion is likely to stay elevated until Wednesday’s release.

Sources

• CNBC — Gold gains for third session, inflation reports in focus
• MarketScreener — Gold rises for third straight session
• Reuters — Gold drifts lower from seven-week peak
• Yahoo Finance — Gold touches $4,400
• Investing.com — Gold’s CPI test
• TradingView — Gold gains for third session

This article is for informational and educational purposes only. It does not constitute investment advice. Do your own research (DYOR) before making any decisions.