Gold prices saw a modest uptick on Tuesday, driven by a weaker dollar, with investors eagerly anticipating the upcoming U.S. inflation report. Against the backdrop of a week packed with data releases and statements from Federal Reserve officials, the market awaits fresh signals regarding the central bank’s stance on potential interest rate cuts.
Spot gold saw a 0.11 percent increase, recording $2,033.56 per ounce as of 6:09 GMT. Meanwhile, U.S. gold futures increased by 0.21 percent to $2,043.10 per ounce.
In Saudi Arabia, 24-carat gold recorded SAR245.4 per gram while 22-carat gold recorded SAR225. 04
Market expectations
The upward movement in gold prices was buoyed by a softer dollar. This makes the precious metal relatively more attractive for investors holding other currencies. Analysts highlighted expectations of consolidation in the gold market ahead of the inflation report. They suggested a narrow trading range with a bias towards selling on any significant price jumps. The support for gold prices is also influenced by recent trends, such as Japan and the UK entering technical recessions.
Federal Reserve’s stance
Despite market speculation, recent remarks from Federal Reserve policymakers indicate no urgency in implementing interest rate cuts. This reinforces expectations against any rate adjustments before June. Market projections suggest a probability of approximately 79 basis points of rate cuts for 2024, with a 61 percent chance of the first quarter-point cut occurring in June, according to LSEG’s interest rate probability app, IRPR. Lower interest rates tend to enhance the appeal of holding non-yielding assets like gold, thus supporting their prices.
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Economic indicators
Investor focus remains on the core personal consumption expenditures price index, scheduled for release on Thursday, which serves as the Fed’s preferred inflation index. Investors are also vigilant regarding the potential risk of U.S. government agency shutdowns if Congress fails to reach an agreement on a borrowing extension by Friday. Such uncertainties could impact gold prices and influence investment strategies.
Other precious metals
In addition to gold, other precious metals experienced varied movements in prices. Spot platinum climbed by 0.6 percent to $885.20 per ounce while palladium edged 0.1 percent higher to $951.82. Moreover, silver rose by 0.2 percent to $22.56 per ounce, reflecting a mixed performance across the sector.
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