Gold gains more than 1% as softer oil prices ease inflation worries
GLD•Spot gold rose 1.6% to $4,129.69 an ounce on Monday as softer oil prices eased inflation concerns. Investors awaited US inflation data, while traders saw a 79% chance of a Federal Reserve rate hike in December.
1. Gold rises as oil falls
Spot gold climbed 1.6% to $4,129.69 per ounce by 0220 GMT, while US gold futures for December delivery rose 1.6% to $4,139.00. Bullion gained about 5% last week. Oil prices fell after President Donald Trump said he was highly unlikely to order further attacks on Iran as talks to end the conflict continued.
2. Rate outlook in focus
Lower oil prices can ease inflationary pressures and reduce expectations that interest rates will stay higher for longer, lowering the opportunity cost of holding non-yielding bullion. The US dollar softened, making gold priced in dollars more affordable for overseas buyers. US job growth accelerated in October and unemployment fell to 4.1%, reinforcing expectations of a resilient labor market and keeping the Fed on track for a December rate increase. Traders saw a 79% chance of a December hike, up from 71% before the payrolls data.
3. Inflation data awaited
Investors awaited US Consumer Price Index data due Tuesday and Producer Price Index data due Friday. Tim Waterer, chief market analyst at KCM Trade, said hotter-than-expected readings would likely firm the dollar and raise the odds of a December rate hike, putting gold back on the defensive. Spot silver rose 2.8% to $53.31 per ounce, platinum gained 1.6% to $1,556.14 and palladium rose 2.1% to $1,044.28.
