Bullion prices traded higher above $4,750 as market players assessed the progress of diplomatic talks between the US-Iran and awaited the release of the US headline inflation report due at 8.30pm tonight (Tuesday).
At 9.15am, gold was trading at $4,745, up 0.19% since it opened in early trade on Tuesday in the Asian session.
US President Donald Trump last weekend rejected a peace proposal from Iran, describing it as “totally unacceptable”, further escalating geopolitical tensions in the Middle East. The situation pushed crude oil prices higher as investors worried that a prolonged conflict could disrupt global energy supplies.
Trump also said on Monday that the ceasefire effort between the two countries was now fragile and on “life support”.
Meanwhile, the market is now focused on the US Consumer Price Index (CPI) report for April, which will be released later today. The headline CPI is expected to rise to 3.7% year-on-year (YoY) compared to 3.3% in the previous month, driven by a significant increase in oil prices. Meanwhile, the core CPI is projected to rise to 2.7% YoY compared to 2.6% previously.
If the US inflation data shows a higher-than-expected reading, it could reinforce the view that the Federal Reserve System may keep interest rates high for an extended period. This expectation has the potential to support the strengthening of the US Dollar and put pressure on the dollar-denominated commodity market.
Market analyst at the American Gold Exchange, Jim Wyckoff said the market is currently witnessing buying activity at low prices and investor positioning adjustment ahead of the release of US inflation data this week.
