Gold rises as investors weigh Fed rate outlook, lower oil prices

Gold edged higher on Monday as softer oil prices tempered some inflation concerns, while investors assessed recent US economic data and the outlook for Federal Reserve interest rates later this year. Spot gold rose 0.4% to $4,181.84 per ounce by 0741 GMT, while US gold futures for December delivery gained 0.5% to $4,202.70. Oil prices slipped from a five-month high on Monday as investors took profit after US President Donald Trump waived sanctions and tariffs on Russia that may lead to more Russian fuel exports. The drop in oil prices eased some inflation concerns after strong US CPI and PPI readings last week, driven in part by a surge in gasoline costs. "Gold is posting a modest rise to start the week. The metal is responding positively to the softer tone in oil prices from an inflation standpoint," said Tim Waterer, chief market analyst at KCM Trade. "In the near term, a more sustained decline in oil prices or a clearer move lower in (US Treasury) yields would be the most constructive catalysts, as both would ease inflation and rate concerns." Market participants now await the Federal Open Market Committee's meeting on US interest rates and the Personal Consumption Expenditures (PCE) data due next week. The US central bank tracks the PCE price measures for its 2% inflation target. According to the CME's FedWatch Tool, traders are pricing in a 15% chance of a rate hike this month and an 89% chance of an increase in December. While gold is typically considered a hedge against inflation, higher interest rates reduce the appeal of the non-yielding asset. Elsewhere, the European Central Bank is likely to raise interest rates by 25 basis points at least one more time this year to fight inflationary pressures, the International Monetary Fund said on Friday. Among other metals, spot silver rose roughly 1% to $57.53 per ounce, platinum gained 1.3% to $1,651.67 and palladium climbed 1.4% to $1,127.59.