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Gold nudges higher after US inflation data

Gold prices rose on Tuesday as U.S. inflation data boosted expectations for Federal Reserve rate cuts. Meanwhile, attention turned to other important economic data due later this week.

Spot gold was up 0.2% to $3,349.60 per ounce by 12:06 pm EDT (1606 GMT).

Dollar weakness has made bullion more affordable for those who hold other currencies.

Last month, the Consumer Price Index in the United States rose by 0.2% after rising 0.3% in June. CPI increased 2.7% in the 12-month period ending July. The economists polled predicted that the CPI would rise 0.2% in July, and 2.8% on an annual basis.

Bob Haberkorn, market strategist at RJO Futures, said that the inflation numbers are mixed but supportive of a rate cut.

"Traders are cautious, as we're in a critical phase and await further economic indicators."

After the CPI data, traders maintained their bets for rate cuts in September and December.

This week, the U.S. Producer Price Index (PPI), weekly unemployment claims and retail sales are also due.

The United States and China extended their 90-day tariff truce, preventing triple-digit duty on the goods of each other.

Razan Hilal is a FOREX.com market analyst. He said that prices are still ranging between important support and resistance levels, as investors digest the recent tariff developments.

Gold, which pays no interest, is more appealing when interest rates are lower. Gold tends to do well in periods of uncertainty as it is seen as a safe haven asset.

U.S. Gold Futures for December Delivery fell 0.1%, to $3399.70 per ounce. Prices fell by more than 2% after U.S. president Donald Trump announced on social media that tariffs would not be imposed on imported gold. U.S. futures for gold rose to new highs after a report that Washington had imposed a tariff on imports 1 kg bars of bullion.

(Reporting by Ashitha Shivaprasad in Bengaluru Editing by David Goodman, Rod Nickel and Tasim Zahid) (Reporting and editing by David Goodman in Bengaluru, Rod Nickel, Tasim Zahid.)

(source: Reuters)