Gold Prices Dip as Attention Shifts to US Inflation Figures
Gold prices experienced a slight decline on Tuesday as investors awaited crucial U.S. inflation data, which could provide insights into the Federal Reserve’s timeline for potential interest rate adjustments.
As of 0732 GMT, spot gold slipped 0.3% to $2,342.80 per ounce, following a modest 1% increase on Monday. Meanwhile, U.S. gold futures saw a 0.4% rise, reaching $2,343.80.
Kelvin Wong, a senior market analyst for Asia Pacific at OANDA, highlighted the impact of a robust dollar, influenced by a shift in U.S. monetary policy stance towards potential interest rate hikes rather than easing. This dynamic poses a risk for spot gold, potentially prompting further corrective movements.
However, Wong noted that in the short term, spot gold retains a slightly positive bias, with $2,310 serving as a key short-term support level for the week.
Focus on US Inflation Data
Investor attention is centered on the core personal consumption expenditures price index (PCE), slated for release on Friday. As the Federal Reserve’s preferred measure of inflation, this data is anticipated to provide valuable insights into the central bank’s policy outlook.
Last week’s release of Fed meeting minutes indicated a current stance of maintaining the benchmark policy rate at its current level, but discussions on potential future rate hikes were also evident.
Traders are currently pricing in approximately a 63% chance of a rate cut by November, according to the CME FedWatch Tool. Higher interest rates increase the opportunity cost of holding non-yielding assets like gold, impacting its attractiveness as an inflation hedge.
Technical Analysis and Other Market Developments
According to Reuters technical analyst Wang Tao, spot gold may encounter resistance at $2,357 per ounce, with potential for further upward movement towards the $2,363-$2,373 range.
In other market news, Vietnam’s central bank announced plans to cease gold auctions in the domestic market and implement new measures to stabilize domestic prices.
Spot silver declined by 0.8% to $31.42, while platinum and palladium also experienced losses, falling by 0.7% to $1,047.20 and $982.24, respectively.
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