Gold Down, but Remains Near One-Week High Thanks to Inflation

Gold was down on Tuesday morning in Asia, although persistent inflationary pressuring gave the safe-haven yellow a boost. Investors also await U.S. inflation data later in the week.

Gold futures inched down 0.04% to $1,821.15 by 12:07 PM ET (5:07 AM GMT), remaining near the high of 1,823.21 hit on Monday. The dollar, which normally moves inversely to gold, edged up on Tuesday. Benchmark 10-year U.S. Treasuries steadied near their highest levels since December 2019, hit during the previous session.

The U.S. data, including the consumer price index, is due on Thursday. It also remains to be seen how the data will impact the U.S. Federal Reserve’s timeline to tighten its monetary policy. Markets are now pricing in a one-in-three chance that the Fed will hike interest rates in March 2022.

Across the Atlantic, there is no need for big monetary policy tightening in the euro zone as inflation is set to fall back and could stabilize at about 2%, European Central Bank President Christine Lagarde said on Monday. She added that high energy prices, a key driver of inflation, are likely to eat into household purchasing power.

Meanwhile, Cleveland Fed President Loretta Mester speaks on Wednesday, with Bank of England Governor Andrew Bailey following a day later.

The ongoing geopolitical tension in Eastern Europe over Ukraine also continues, but French President Emmanuel Macron warned that the coming days will be crucial after meeting with Russian counterpart Vladimir Putin. However, Putin hinted that some progress had been made in the talks.

In other precious metals, silver inched up 0.1%, platinum was steady at $1,020.06, and palladium edged up 0.2%.