• Gold price increases as US Treasury yields drop and the US Dollar weakens.
• Traders await US CPI data; Fed rate cut odds are 67% for a 25 bps reduction and 33% for 50 bps.
• Focus shifts to the first US presidential debate, potentially impacting market sentiment ahead of election.

Gold prices advanced in the mid-North American session on Tuesday, gaining some 0.30% as traders braced for the crucial August inflation report from the United States (US). This, along with the first presidential debate between Vice President Kamala Harris and former President Donald Trump, could influence the financial markets. The XAU/USD trades at $2,514, bouncing off daily lows of $2,500.

The market mood has slightly improved, while the Greenback pared some of its earlier gains, a tailwind for the golden metal. US Treasury bond yields fell ahead of the latest Consumer Price Index (CPI) reading. Figures are expected to justify the Federal Reserve's (Fed) dovish stance toward beginning a rate cutting cycle amid fears that the labor market could weaken.

The latest US jobs report revealed that the economy added fewer people to the workforce than expected, but the Unemployment Rate ticked lower, a relief for Fed policymakers.

Meanwhile, the swaps market shows the odds for a 50 bps cut have increased to 33%, while they stand at 67% for 25 bps, according to the CME FedWatch Tool. Earlier, a Reuters poll revealed that 92 of 101 economists expect the Federal Reserve (Fed) to lower interest rates by 25 basis points (bps) at the September 17-18 meeting.