Spot gold climbed 0.5 percent to $4,378.60 an ounce at 11:45 a.m. in Singapore on Sept. 9, reversing a three-day decline of 2.6 percent.
The U.S. dollar weakened, with the Bloomberg Dollar Spot Index falling 0.1 percent today and down 0.4 percent for the week. A softer dollar makes dollar-denominated commodities cheaper for international buyers and provides a natural bid for gold.
Geopolitical escalation in the Middle East added a secondary support. U.S. forces destroyed five Iranian tankers near Kharg Island after attempted missile attacks on an American warship. The escalation pushed Brent crude toward $100 a barrel, reigniting inflation concerns.
Manav Modi, a commodity analyst at Motilal Oswal Financial Services, said higher crude prices have amplified concerns that energy costs could sustain elevated inflation. Modi noted that yen strength to a seven-month high provided additional relief for dollar-denominated bullion.
The market's attention is fixed on the Fed's Sept. 14-15 meeting and inflation data due this week. Swaps traders price a roughly 60 percent probability of a rate increase this month.
Ahmad Assiri, a market strategist at Pepperstone Group, said a softer Consumer Price Index reading would support the case for the Fed to hold rates steady and lift gold. An upside CPI surprise would strengthen the hike argument and likely pressure gold, which generates no yield and suffers in higher-rate environments.
Gold has consolidated in a narrow range around $4,400 an ounce since rebounding from a July floor near $4,000. The pattern reflects traders recalibrating expectations for Fed monetary policy.
Assiri said the upcoming CPI outcome could serve as the catalyst for gold's next significant price move.
Silver climbed 0.8 percent to $66.298 an ounce, and platinum advanced 1 percent. Palladium traded flat.
