Gold prices steadied near $4,400 an ounce as traders awaited upcoming US inflation data, which is expected to provide clues regarding the Federal Reserve's future interest rate decisions. The precious metal had gained 1% in the previous session, breaking a three-day losing streak, and has been trading within a narrow range in recent weeks.
Despite near-term headwinds such as rising bond yields and escalating tensions in the Middle East, some investors are betting on gold's long-term value as a portfolio hedge. The anticipation of US inflation figures, including the Producer Price Index (PPI) on Thursday and the Consumer Price Index (CPI) on Friday, is a key factor influencing market sentiment.
Money markets are currently pricing in approximately a 60% chance of a quarter-point rate hike by the Federal Reserve at its September 15-16 meeting. This expectation is partly driven by recent positive US jobs data. The subdued US dollar has also provided some support for gold, making the dollar-denominated asset more attractive to holders of other currencies. However, elevated crude oil prices, which have reached a fresh three-month high due to geopolitical tensions, are raising inflation concerns and could further bolster the case for a Fed rate hike. The US Treasury's recent announcement of a $6 billion bond buyback for 10- to 20-year instruments also impacts market dynamics.
