Gold drops on profit-taking, US inflation data in focus

FE Team | Published: August 13, 2024 21:37:50

LONDON, Aug 13 (Reuters): Gold prices fell on Tuesday as investors locked in profits after the metal closed at an all-time high in the previous session and ahead of key U.S. inflation data that could influence bets around the Federal Reserve's monetary policy path.
Spot gold was down 0.3 per cent at $2,465.42 per ounce by 1201 GMT. Prices on Monday rose 1.7 per cent to $2,472, a record high for the closing price.
Non-yielding gold is up 19 per cent so far this year after spot prices touched a record high of $2,483.60 on July 17 on improved market confidence that the Fed would cut interest rates in September.
"There is for sure some taking money off the table as we got close to $2,480. If the selling does not go below $2,430, then we have a solid base to try $2,500 as volatility in the geopolitical spectrum is still quite high," a trader said. Fears that the conflict in Gaza could turn into a broader Middle East war have escalated after the killing of Hamas leader Ismail Haniyeh in Iran last month.
Traders are awaiting U.S. July consumer price index (CPI) data, due on Wednesday, and the retail sales data on Thursday.
Both sets of the data are a major risk event for gold that are likely to shape expectations around what the Fed does in September, said FXTM senior research analyst Lukman Otunuga.
Analysts at ANZ raised their year-end price target for bullion to $2,550 betting that the start of the Fed's cutting cycle would attract strategic investment in gold.
With the expected nearing of rate cuts, global physically backed gold exchange-traded funds (ETFs), a crucial category of demand, started purchases again after several years of outflows and so far have seen three consecutive months of inflows.
Wall Street's main indexes closed mixed on Monday as investors braced for more key economic data in the hope of gauging the Federal Reserve's next policy moves.
Gold ETFs, storing bullion for investors, saw net inflows of 48.5 metric tons ($3.7 billion) in July, the largest monthly inflow since March 2022, according to the World Gold Council.
Meanwhile, retail jewellery demand in China, the world's top consumer, has been muted by high prices. There has also been a pause in gold buying by China's central bank.
Among other metals, spot silver fell 0.8 per cent to $27.79 per ounce, platinum lost 0.3 per cent to $933.45 and palladium was down 0.2 per cent at $918.26.