By Ambar Warrick
Investing.com-- Gold prices inched higher on Monday, retaining mild gains from last week as the dollar fell further from 20-year highs ahead of key U.S. inflation data this week.
Spot gold prices rose 0.1% to $1,718.83 an ounce, while gold futures edged up to $1,730.0 an ounce by 19:15 ET (23:15 GMT). Both instruments rose slightly last week, breaking a three-week losing streak as the dollar weakened.
The dollar index fell 0.2% on Monday, with focus turning to key U.S. CPI inflation data for August, due tomorrow. Inflation in the world’s largest economy is expected to have eased further from highs hit this year, a trend which may encourage the Federal Reserve to eventually bring down its pace of interest rate hikes.
A series of sharp rate hikes by the Federal Reserve severely dented bullion prices this year, as investors sought better yields from U.S. Treasuries and the dollar. This trend is expected to continue in the near-term, with the Fed broadly expected to raise rates by 75 basis points - the upper end of expectations - at its meeting next week. While U.S. CPI inflation did ease slightly in the past month, it remained pinned near 40-year highs by elevated food and fuel costs.
But with fuel costs now easing from record highs hit earlier this year, inflation may see more signs of cooling.
Other precious metals also rose on weakness in the dollar. Platinum futures added 0.2%, while silver futures jumped nearly 0.7%, with both extending gains from last week.
Among industrial metals, copper prices fell slightly on Monday after logging strong gains last week. Copper futures fell 0.2% to $3.5470 a pound.
Focus is now on a potential supply shortfall of the red metal, stemming from a strike at the Escondida mine in Chile.
Escondida is the largest copper mine in the world. Last week, unionized workers voted to begin partial production stoppages from this week, with plans for a full stoppage later in the month.
The strike stems from disagreements between the union and mine owner BHP Group (ASX:BHP) over safety conditions.