Gold off three-week lows as investors brace for US inflation data

By Swati Verma

(Reuters) - Gold prices dipped on Monday as the U.S. dollar climbed ahead of U.S. inflation data this week. Still, bullion was off three-week lows after slowing U.S. job growth knocked bond yields from their recent highs.

Spot gold was down 0.3% at $1,936.80 per ounce by 0757 GMT, having slid to its lowest since July 11 on Friday before settling 0.4% higher. U.S. gold futures eased 0.2% at $1,971.60.

The benchmark 10-year Treasury yields slid from November highs after data on Friday showed the U.S. economy added fewer jobs than expected in July. [USD/] [US/]

Markets also took stock of labor department data showing solid wage gains and a decline in the unemployment rate that suggested continued tightness in labor market conditions.

The job report has been largely mixed, said Yeap Jun Rong, a market strategist at IG, adding that cooling job gains provide an argument for the Fed to keep rates on hold, but more persistent wage pressures from labor market tightness suggest that investors should still keep an eye on inflation risks.

Data on U.S. consumer prices, due on Thursday, will be in focus to assess whether more rate hikes are needed to tame inflation.

Non-yielding gold is often sought as a safe investment against inflation but tends to lose its sheen when rates rise.

Gold and silver prices are expected to move higher this month as the U.S. dollar and rates could back off somewhat heading into the September Fed meeting, Edward Meir, a metals analyst who provides research for Marex, wrote in a monthly report.

"In-line or better-than-expected inflation numbers out this week could support our argument for a lower dollar and interest rates and thus give gold and silver a bit of a lift."

Spot silver fell 0.4% to $23.50 an ounce, while platinum added 0.2% to $924.02. Palladium gained 0.5% to $1,263.10.

 

(This story has been corrected to say that U.S. CPI data is due on Thursday, not Wednesday, in paragraph 6)

 

(Reporting by Swati Verma in Bengaluru; Editing by Bernadette Baum)