NEW YORK — Gold advanced above $4,400 an ounce, reaching a two-month high ahead of a U.S. inflation report that could influence the Federal Reserve's next move on interest rates.
The precious metal gained 3.6 percent over the previous two sessions, driven by technical buying after gold cleared its 100-day moving average Monday and by inflows into gold-backed exchange-traded funds in China.
Hebe Chen, an analyst at Vantage Markets in Melbourne, said the pieces around gold are shifting. She characterized the recovery as an early-stage move into a new cycle, with gold breaking away from a downside spiral that began in March. Chen said gold's ability to rise alongside higher oil prices and a stronger dollar signals a re-evaluation of the metal's role in the current market.
Traders are now focused on the July consumer price index, due Wednesday. Economists surveyed by Bloomberg project CPI to rise 0.1 percent in July, following a 0.4 percent decline in the prior month. That moderation, combined with a weak jobs report released Friday, could ease pressure on the Fed to tighten policy.
The calculus shifts if higher energy prices feed through to broader inflation. President Donald Trump made new demands on Iran Monday, a stance that reduces the likelihood of a deal to reopen the Strait of Hormuz and could push oil prices higher.
Cleveland Fed President Beth Hammack said a number of rate hikes may be necessary to bring inflation down to the central bank's 2 percent target. Hammack was one of three Fed officials who dissented last month against the decision to hold borrowing costs steady.
Trump also addressed his contact with Fed Chairman Kevin Warsh, saying he had spoken to Warsh only once, briefly, since Warsh took the role in May.
Gold has held above the $4,000-an-ounce level in recent weeks, supported by a rise in central bank purchases that has provided a demand floor for the metal.
