Gold Futures Settle Higher As Dollar Weakens Ahead Of Key Data

Gold prices climbed higher on Monday as the dollar lost ground as risk sentiment improved after the latest inflation data from China stoked optimism about easing deflationary pressures in the world’s second largest economy.

The dollar index, which fell to 104.42, was at 104.51 a little while ago.

Gold futures for December ended higher by $4.50 or about 0.2% at $1,947.20 an ounce.

Silver futures for December ended up by $o.209 at $23.383 an ounce, while Copper futures for December settled at $3.8070 per pound, gaining $0.0905.

“Gold prices are rallying as the king dollar trade tentatively runs out of steam. This is a big week for the dollar trade as inflation/retail sales data, a UAW potential strike, and as a live ECB policy meeting could lead to the demise of the dollar’s crown,” says Edward Moya, Senior Market Analyst at OANDA. Moya adds that in the event of the Bank of Japan continuing to stick to more verbal intervention, the dollar will remain vulnerable over the short term.

China’s consumer prices returned to positive territory in August while factory-gate price declines slowed, data showed over the weekend.

Meanwhile, investors await Chinese data on industrial output and retail sales, and data on U.S. consumer and producer inflation as well as retail sales, industrial production and consumer sentiment.

The U.S. CPI is expected to have increased 3.6% in August from 3.2% in the prior month. Meanwhile, the core reading is seen softening to 4.3% from 4.7%.

CME Group’s FedWatch Tool currently indicates a 93% chance the Federal Reserve will leave interest rates later this month but a 43.4% chance of another rate hike in November.

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