By Ambar Warrick
Investing.com-- Gold prices held on to recent gains on Tuesday as volatility in stock markets ahead of a closely-watched U.S. inflation figure this week drove up safe haven demand.
As of 2150 ET (0151 GMT), spot gold was down slightly at $1,785 an ounce, while gold futures held around $1,801. Both instruments had rallied nearly 1% on Monday, as uncertainty over upcoming U.S. CPI inflation data drove the dollar lower.
U.S. stock markets saw a volatile session on Monday amid a mixed bag of earnings, which drove up safe haven demand. Investors are also caught between the growth and value play, ahead of inflation data later this week.
Focus is now on U.S. CPI data for July, due on Wednesday. Analysts are expecting a year-on-year reading of 8.7%, down from the 9.1% seen in June. A bigger-than-expected dip in inflation is likely to bring down expectations of steep interest rate hikes by the Federal Reserve, and will be positive for gold prices.
But a stronger-than-expected reading could underpin U.S. Treasury yields, driving more traders into the dollar, and denting most metal markets.
Still, inflation is likely to remain at 40-year highs for the coming months, inviting continued monetary policy tightening by the Fed.
Among industrial metals, Copper Futures retreated 0.5% on Tuesday to $3.5680 a pound, after a 1.3% rally on Monday. Copper prices have largely tumbled this year amid signs of sluggish industrial activity across the globe.
But a surprise jump in Chinese export data this week helped ease some concerns over global demand. Chinese appetite for the industrial metal also remains strong, despite a decline in manufacturing activity caused by a series of COVID-related lockdowns.
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