Gold Edges Lower In Lackluster Trade; US Inflation Data In Focus

(RTTNews) - Gold edged lower on Thursday amid fears that rising oil prices will fan inflation and add to pressure on global central banks to raise interest rates.

Spot gold slipped 0.2 percent to $4,391.07 an ounce after rising earlier in the session on a softer dollar.

U.S. gold futures were down 0.6 percent at $4,434.60 an ounce as Brent crude prices rose above $102 a barrel to reach their highest level since May.

As the Middle East conflict shows no signs of easing, the European Central Bank is seen raising rates for the second time this year later today.

With a 25-basis points hike fully priced in, ECB President Lagarde's comments and updated economic forecasts will be in the spotlight.

Traders also await the release of the U.S. August Producer Price Index (PPI) later in the day, followed by CPI data on Friday, for additional clues about the Federal Reserve's rate path.

After last Friday's robust August U.S. jobs report, markets now put the odds of a Federal Reserve rate hike on September 16 at about 60 percent, but the decision largely hinges on the inflation readings.

On the geopolitical front, there has been an escalation in fighting between Saudi Arabia and the Houthis in Yemen, fueling concerns about further disruptions to energy supplies.

At least 23 people were killed in a Yemen prison airstrike as Houhi rebels and the Saudi-led coalition exchange attacks.

U.S. President Donald Trump said he doesn't think the Iran war will end until after November's midterm elections, adding that the U.S. is not looking to restart negotiations and that Tehran "can't hold out any longer."

Trump also said that recent U.S. strikes in Strait of Hormuz have incapacitated nine Iranian tankers and more attacks could follow.

Iran's Islamic Revolutionary Guard Corps (IRGC) has claimed that its naval forces attacked two U.S. vessels and eight oil tankers near the Strait of Hormuz after the U.S. sank five Iranian oil tankers, adding it would escalate its response to any further attacks.