Gold hovers near 1-week peak as investors gear up for US inflation data

Gold prices eased on Tuesday but hovered near a one-week high, while markets awaited a key U.S. inflation data that could provide further insight into the U.S. Federal Reserve‘s next policy decision.

FUNDAMENTALS

* Spot gold fell by 0.2% to $2,466.69 per ounce, as of 0155 GMT, after hitting its highest since Aug. 2 earlier in the session.

* U.S. gold futures rose 0.1% to $2,506.90.

* Traders are waiting for the July U.S. producer price index (PPI) due later in the day, followed by consumer price index (CPI) on Wednesday. The CPI data is expected to show that headline and core prices rose 0.2% month-on-month. * Traders expect about 50% chance of a 50 basis point interest rate cut in September by the Fed, according to the CME FedWatch Tool. A low interest rate environment tends to boost non-yielding bullion’s appeal. * SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.34% to 849.79 metric tons on Monday from 846.91 tons on Friday. * The U.S. government recorded a $244 billion budget deficit for July, up 10% from a year earlier, but accounting for calendar differences, the gap would have been $45 billion narrower, the Treasury Department said.

* On the geopolitical front, Israeli Prime Minister Benjamin Netanyahu traded barbs with his defence minister, underscoring the deep internal splits that continue to plague the government as the war in Gaza risks spilling out into a wider regional conflict.

* Spot silver 0.5% to $27.8607 per ounce, platinum edged 0.2% higher to $938.55 and palladium shed 0.4% to $917.10

DATA/EVENTS (GMT)

0600 UK Claimant Count Unem Chng July

0600 UK ILO Unemployment Rate June

0600 UK HMRC Payrolls Change July

0900 Germany ZEW Economic Sentiment August

0900 Germany ZEW Current Conditions August

1230 US PPI Machine Manuf’ing July