(Bloomberg) -- Gold rose, closing in on a record again as traders assessed geopolitical developments while awaiting key U.S. economic data due later this week that may help determine the Federal Reserve’s interest-rate path.
Bullion was up by as much as 1.6% to $2,471 an ounce, in touching distance of last month’s all-time high of $2,483.73. Traders continued to monitor Iran’s response to last month’s assassination of a Hamas leader in Tehran.
Investors are also preparing for U.S. producer price index figures on Tuesday and consumer price index numbers on Wednesday. Both will shed light on inflation in the world’s largest economy.
Gold was boosted by “a combination of geopolitics and a drop in rates, plus less downward pressure from the Bank of Japan tightening,” said Bart Melek, global head of commodity strategy at TD Securities.
While CPI is expected to show price increases picked up modestly in July, the annual metrics should continue to rise at a slow pace. The recent easing of price pressures has boosted policymakers’ confidence that they can start to lower borrowing costs while refocusing their attention on the labor market, which is showing greater signs of cooling.
Fed Governor Michelle Bowman said Saturday that she still sees upside risks for inflation and continued strength in the labor market, signaling she may not be ready to support a rate cut in September. Higher borrowing costs are typically negative for gold, because it doesn’t pay interest.
The precious metal has gained almost 20% this year. Along with rate-cut expectations, it’s also been supported by firm central bank buying and robust demand from Chinese consumers. Rising Middle East tensions have also bolstered gold’s appeal as a haven asset.
Meanwhile, figures for money managers’ net bullish gold bets hit a five-week low, according to weekly data from the Commodity Futures Trading Commission.
Spot gold rose 1.6% to US$2,470.71 an ounce as of 2:50 p.m. in New York. The Bloomberg Dollar Spot Index climbed 0.2% after the yen fell more than 1%. Palladium, platinum and silver all advanced.
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