Gold rose on Tuesday after hitting a two-week low earlier in the session, as markets awaited key U.S. inflation data, with escalating U.S.-Iran tensions driving oil prices higher and reinforcing expectations of further Federal Reserve rate hikes.
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Gold gained more than 1% on Tuesday after softer-than-expected inflation data.
Spot gold rose 1.2% to $4,046.64 an ounce, after falling to its lowest level since July 1 earlier in the session. U.S. gold futures gained 1.6% to settle at $4,069.70.
The U.S. dollar fell 0.3%, making greenback priced-bullion more affordable for other currency holders.
“Gold gallops higher on a surprisingly subdued CPI report that saw headline dive lower but more importantly, core unchanged versus 0.2%. This should drop rate hike expectations sharply at least for the July and September meetings,” said Tai Wong, an independent metals trader.
U.S. consumer inflation slowed more than expected in June. The consumer price index increased by 3.5% in the 12 months through June after surging 4.2% in May, while core CPI inflation on a month-over-month basis was unchanged during the month, after gaining 0.2% in May.
After the data, traders exited bets that the Fed would hike rates at its July 28-29 meeting.
