Gold prices saw an increase on Monday, recovering from the two-week low they recorded in the previous session, as traders reassessed their expectations for U.S. interest rate cuts ahead of an upcoming key inflation report.
In Saudi Arabia, 24-carat gold saw a 0.38 percent increase to SAR282.62 per gram and SAR8,789.99 per ounce.
Globally, spot gold saw a 0.37 percent increase to $2,342.58 per ounce, as of 5:05 GMT, after hitting its lowest since May 9 at $2,325.19 on Friday. Meanwhile, U.S. gold futures saw a 0.38 percent increase to $2,343.40.
Market sentiment
Last week, gold prices achieved a record high of $2,449.89, but have since lost over $100. Analysts believe that gold prices can manage a small recovery from current levels before retesting the $2,280-$2,300 zone. Moreover, gold could extend its losses further if U.S. economic data continues to outperform.
Investor focus now turns to the upcoming core personal consumption expenditures (PCE) price index, the U.S. Federal Reserve‘s preferred measure of inflation, which is due on Friday. This report is critical as it will influence the Fed’s monetary policy decisions. Higher interest rates typically decrease the appeal of non-yielding assets like gold, thus impacting its prices.
Fed’s stance
Minutes from the Federal Reserve’s latest meeting, released last week, indicated that achieving the central bank’s 2 percent inflation target might take longer than anticipated. This has led to an increase in skepticism among traders regarding the likelihood of multiple rate cuts in 2024. According to the CME FedWatch Tool, there is currently a 63 percent chance of a rate cut by November.
Read: Oil prices bounce back slightly as traders eye U.S. inflation report, upcoming OPEC+ meeting
Other precious metals
In addition to gold prices, other metals saw an increase with spot silver rising 1.59 percent to $30.82. Meanwhile, spot platinum rose 1.50 percent to $1,041.00 and spot palladium increased 1.46 percent to $977.55.
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