Gold Holds Near Record As Traders Weigh Geopolitics, Key US Data

Gold steadied near a record as traders weighed a potential escalation in Middle East tensions, while markets braced for a US inflation report that may prove pivotal in shaping the Federal Reserve’s interest-rate path.

Bullion was little changed near $2,470 an ounce in Asia hours after jumping 1.7% higher on Monday, with haven demand supporting the metal’s move closer to last month’s all-time high amid fears that Iran could attack Israel as soon as this week.

The US and its allies are now trying to head off a potential strike, which could spark a wider regional war after Iran blamed Israel for last month’s assassination of Hamas leader Ismail Haniyeh in Tehran.

Markets are also preparing for US producer price index figures later on Tuesday and consumer price index numbers on Wednesday. The data will offer clues on whether US central bankers have room to engineer a “soft landing” as they seek to tame inflation while also avoiding a recession. 

The CPI report is expected to show price increases picked up modestly in July, though the annual metrics should continue to rise at a slow pace. The recent easing of price pressures has boosted confidence that the Fed can reduce rates next month. Lower borrowing costs typically aid gold, which doesn’t pay interest.

Bullion has gained 20% this year amid mounting optimism on rate cuts. The metal has also been supported by large purchases from central banks and robust demand from Chinese consumers. Rising geopolitical risks — from the Middle East to the upcoming US election — have also underscored gold’s appeal as a haven asset.

Spot gold was little changed at $2,474.77 at 7:23 a.m. in Singapore. The Bloomberg Dollar Spot Index was flat, after a 0.2% gain on Monday. Silver and platinum were steady, while palladium edged higher.

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