International gold prices rose for a third consecutive session on Tuesday, climbing to their highest level in more than two months as investors turned their attention to upcoming U.S. inflation data for clues about the Federal Reserve’s interest-rate outlook.
Spot gold rose 1% to $4,432.74 an ounce, its highest level since June 5, while U.S. gold futures gained 1.7% to $4,492.60 an ounce.
The latest rally has been supported by renewed investor demand following gold’s earlier decline, as well as the unwinding of short positions and increased appetite for safe-haven assets, according to market analyst Tony Sycamore.
Sycamore said gold could eventually move towards $5,000 an ounce if economic and geopolitical conditions remain supportive of the precious metal.
Investors are now awaiting U.S. consumer price data due on Wednesday and producer price figures expected on Thursday.
The reports could provide fresh clues about the Federal Reserve’s next policy moves and the direction of interest rates.
Expectations for a rate hike have eased following weaker-than-expected U.S. employment data last week, while the Federal Reserve kept interest rates unchanged at its July meeting.
Lower interest rates generally support gold because the metal does not pay interest, making it relatively more attractive when the opportunity cost of holding non-yielding assets declines.
A weaker dollar, which can accompany expectations of lower rates, can also boost demand for dollar-denominated bullion among buyers using other currencies.
“If economic data continues to indicate a slowdown in the economy and no significant increase in inflation, expectations of tightening in interest rates may decrease further,” market analyst Fawad Razzakzadeh said, adding that this could put pressure on the dollar and provide further support to gold.
Geopolitical tensions are also keeping safe-haven demand in focus. Uncertainty surrounding efforts to reopen the Strait of Hormuz has increased after U.S. President Donald Trump made additional demands as part of efforts to reach a peace agreement with Iran.
Other precious metals also gained, with silver rising 0.9% to $66.30 an ounce, platinum advancing 0.7% to $1,765.26 and palladium adding 0.8% to $1,394.
The latest advance has renewed investor interest in bullion, but the direction of U.S. inflation and interest-rate expectations is likely to remain a key driver of gold prices in the coming sessions.
