Gold flat as investors seek direction from U.S. inflation data

Gold prices were listless on Tuesday as investors held to the sidelines ahead of key U.S. inflation figures, which are likely to influence the Federal Reserve’s rate-hike narrative.

FUNDAMENTALS

* Spot gold was flat at $1,675.29 per ounce, as of 0034 GMT. Bullion prices hit a three-week peak in the previous session, buoyed by a weaker U.S. dollar.

* U.S. gold futures fell 0.2% to $1,677.30.

* The U.S. consumer price index report is due on Thursday. Traders now expect a 65% odds of a 50-basis-point rate hike at the Fed’s December meeting.

* Gold is considered a hedge against inflation, but rising interest rates increase the opportunity cost of holding non-yielding bullion.

* The European Central Bank must not stop raising interest rates until underlying inflation has clearly peaked, but it may slow the pace of hikes once rates hit a level that starts to restrict growth, France’s central bank chief told the Irish Times.

* Focus is also on the U.S. midterm elections, which will determine control of Congress and could spur moves all over the market.

* Spot silver was up 0.1% at $20.80. Platinum rose 0.1% to $980.09 and palladium also gained 0.1% to$1,898.22.

* Raising fears of a slowdown, China’s exports and imports unexpectedly contracted in October, as a perfect storm of COVID-19 curbs at home and global recession risks dented demand and further darkened the outlook for a struggling economy.