Gold rises over 1% as softer oil prices ease inflation worries
GLD•Spot gold rose 1.4% to $4,123.46 an ounce as lower oil prices eased inflation concerns. Investors awaited US CPI data due Tuesday and further signals on Federal Reserve policy.
1. Gold gains as oil falls
Spot gold climbed 1.4% to $4,123.46 per ounce by 0428 GMT, while US gold futures for December delivery rose 1.4% to $4,132.70. Bullion gained about 5% last week. Oil prices fell after Donald Trump said he was highly unlikely to order further attacks on Iran as talks to end the conflict continued.
2. Rates and inflation outlook
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 dollar softened, making gold more affordable for overseas buyers. US job growth accelerated in October and unemployment fell to 4.1%, while traders priced an 81% chance of a December Fed rate increase, up from 71% before the payrolls data.
3. Investors await inflation data
Investors awaited US Consumer Price Index data due Tuesday and Producer Price Index data due Friday. Tim Waterer of KCM Trade said hotter-than-expected readings would likely firm the dollar and lift the odds of a December rate hike, putting gold back on the defensive. Spot silver rose 2.5% to $53.15 an ounce, platinum gained 1.3% to $1,553.23 and palladium rose 2.1% to $1,045.11.
