Gold prices fell in early trading on Tuesday, pressured by a stronger dollar, as traders awaited key U.S. inflation figures that could provide hints about the size of the U.S. interest rate cut next week.
Update prices
Spot gold was down 0.1 percent at $2,503.09 an ounce by 0301 GMT, while U.S. gold futures were flat at $2,532.20.
The dollar hit a one-week high, making gold more expensive for holders of other currencies.
The market's focus is on the US CPI data due tomorrow, Wednesday, and the PPI reading on Thursday.
The consumer price index is expected to rise about 0.2 percent on a monthly basis in August, according to a Reuters poll, unchanged from July.
“Inflation data is expected to reflect further slowdown and give the green light for the Fed to cut interest rates,” said Ye Jun Rong, senior market analyst at IG. “With no major surprises in the data, gold prices are expected to remain well supported above $2,500. We expect gold prices to touch $2,660 in the coming months.”
Low interest rates reduce the opportunity cost of holding the non-yielding yellow metal.
The Fed is almost certain to cut interest rates when it meets next week. According to the CME FedWatch tool, traders see a 70 percent chance of a 25 basis point cut versus a 30 percent chance of a 50 basis point cut.
Among other precious metals, spot silver fell 0.3 percent to $28.27 an ounce, while platinum rose 0.5 percent to $942.45 and palladium rose 0.4 percent to $950.55.
