BENGALURU (Sept 8): Gold prices inched lower on Tuesday as rising oil prices fuelled inflation concerns and boosted expectations for a September Federal Reserve (Fed) rate increase, with investors awaiting US inflation data for further clues on the interest-rate outlook.

Spot gold fell 0.2% to US$4,396.19 (RM17,780.38) per ounce by 09.44am EDT (1344 GMT), while US gold futures for December delivery dropped 0.8% to US$4,441.30.

"Gold is range-bound because it is capped by a higher probability of raising interest rates, which continues to hinder momentum in the market," said Daniel Pavilonis, a senior market strategist at Stone X.

Oil prices touched multi-week highs after Yemen's Tehran-backed Houthis attacked Saudi energy facilities and Tehran threatened the US with "economic warfare".

Brent crude neared the US$100-per-barrel mark, touching US$99.46, its highest level since July 24, fuelling inflation worries.

The market continues to absorb the stronger-than-expected US jobs report and await upcoming consumer and producer price index data, while higher oil prices are raising inflation concerns and supporting expectations for a September rate hike, said Peter Grant, a vice-president and senior metals strategist at Zaner Metals.

Spot gold fell as much as 2.4% last Friday after data showed US job growth accelerated sharply in August while the unemployment rate held steady at 4.1%, reinforcing signs of resilience in the labour market.

Traders are now pricing in about a 60% chance of an interest rate hike at the central bank's policy meeting, according to the CME FedWatch Tool, up from about 50% before the data.

The US producer price index data is due on Thursday and consumer figures on Friday.

Although gold is often viewed as a safeguard against inflation, rising interest rates tend to weigh on demand for the non-yielding metal.

Among other metals, silver edged 0.33% lower to US$65.92 per ounce, platinum was steady at US$1,827.83 and palladium slid 2.7% to US$1,351.39.

Uploaded by Tham Yek Lee