Gold Listless as Investors Await US CPI Data for Fed Policy Guidance

GOLD - SINGAPORE. Gold prices settled into a holding pattern on Tuesday as investors awaited U.S. inflation figures that could provide an updated view on interest rates after the Federal Reserve kept the door open for further policy tightening.

Spot gold was flat at $1,922.30 per ounce by 0306 GMT, while U.S. gold futures eased 0.1% to $1,946.10.

Market activity is likely to be broadly subdued until the U.S. Consumer Price Index (CPI) data is out on Wednesday, which could provide guidance on U.S. interest rates after a widely expected pause by the Fed next week.

"A CPI number coming in in-line or even slightly higher would likely place some short-term pressure on gold," said Nicholas Frappell, global head of institutional markets at ABC Refinery.

Americans' overall views on inflation were little changed in August, even as they predicted higher prices for essentials such as rent and food, the New York Fed reported on Monday.

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Markets are pricing in a 93% chance of the Fed holding rates steady at their Sept. 19-20 policy meeting, but there's a 41% chance of a hike in November, according to CME's FedWatch tool.

Demand for non-interest-bearing gold could take a hit if the Fed further raises U.S. interest rates to quell inflation.

Capping gold's gains, the U.S. dollar index gained some lost ground ahead of the CPI data.

"From a broad perspective, gold prices have continued to hold up relatively well amid the multi-month trend of a stronger U.S. dollar and higher U.S. long-term yields," J.P. Morgan analysts said in a note.

Although, a sustained push higher in gold prices likely needs to be catalysed by an eventual turn towards a Fed cutting cycle, they added.

Elsewhere, spot silver rose 0.4% to $23.16, platinum gained 0.3% to $901.02 and palladium added 0.3% to $1,221.83.