Gold ticks up as oil eases; spotlight on US inflation data

By Reuters News

By Ashitha Shivaprasad

Oct 13 (Reuters) - Gold ticked up on Tuesday as oil prices slipped, while markets focused on the upcoming US inflation data for fresh signals on the Federal Reserve's interest-rate trajectory.

Spot gold was up 0.4% to $4,185.69 per ounce by 0356 GMT after hitting a one-week peak on Monday.

US gold futures for December delivery rose 0.5% at $4,209.90.

Oil prices fell and were on track for their first decline in nearly a week. O/R

Higher oil prices due to the Middle East tensions have raised inflation concerns and strengthened the case for restrictive monetary policy. While gold is considered a hedge against inflation, higher rates often draw investors toward yield-bearing assets instead of the non-yielding metal.

The Consumer Price Index (CPI) is due on Wednesday, and the Producer Price Index (PPI) report is scheduled for Thursday.

"US CPI data will be critical for gold in the short term," said Kyle Rodda, senior financial market analyst at Capital.com.

If inflation comes in hotter than expected, particularly on the core measure, and prompts even a modest increase in expectations of an October rate hike, it could result in another dip in gold, he added.

Currently, traders see only a 19% chance of a Fed rate hike this month but are pricing in an 85% chance of a December increase, according to CME's FedWatch tool.

Cleveland Fed President Beth Hammack said the US central bank should move "relatively quickly" to a more restrictive monetary policy stance to control inflation, which she feels has become broader-based and is starting to influence firms' price-setting plans.

On the geopolitical front, Saudi Arabia said it was facing a new barrage of incoming fire and that Riyadh airport would remain shut for now, days after Saturday's deadly missile strike on a departure terminal that was claimed by Yemen's Iran-allied Houthis.

Among other metals, spot silver gained 0.2% to $60.42, platinum added 0.7% to $1,697.40, and palladium firmed 0.1% to $1,144.30.

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