Gold slips 0.3% in Asian trade as markets await US inflation data

Markets around the world are in turmoil and gold prices are swinging up and down. Gold prices fell slightly once again at the start of trading in Asian markets on Tuesday. In the previous session, gold had risen by more than 1 per cent. The fall is being attributed to inflation data due from the United States.

At the start of Asian trading on Tuesday, spot gold fell 0.3 per cent to $4,128.48 an ounce. Its price had risen by more than 1 per cent in Monday's trading. US gold futures, on the other hand, gained 0.6 per cent to reach $4,137.60 an ounce.

Silver followed gold, slipping 0.3 per cent to $53.25 an ounce. Platinum fell 0.3 per cent and palladium fell 0.9 per cent.

Investors across the world are focused on US consumer price index (CPI) data, which is due on Tuesday. The producer price index data will be released on Friday. Investors are waiting for these figures because the US central bank, the Federal Reserve, may use them in deciding future interest rates.

The level of inflation in the US will determine what the Federal Reserve does with interest rates. If inflation stays high, the Fed could decide to raise rates. The question is whether gold could come under further pressure if US inflation figures come in above expectations.

Higher interest rates hurt gold because, unlike bank deposits or bonds, gold does not give investors regular interest. When rates rise, investors begin to expect better returns from other options. This could affect demand for gold.

At the same time, fear of a rate rise can also support the US dollar and government bond yields. A stronger dollar makes gold more expensive to buy in other currencies, which can affect demand.