Gold prices saw an uptick in Asian trading on Tuesday, recovering from recent losses as traders awaited potential dovish signals from Federal Reserve Chair Jerome Powell’s upcoming testimony.
After retreating on Monday, gold remained buoyed by gains accumulated over the past week, fueled by disappointing labor market data that heightened expectations of an interest rate cut by the Fed in September. The weakening US Dollar further supported gold’s ascent.
Spot gold rose by 0.4% to $2,367.97 per ounce, while gold futures expiring in August increased by 0.5% to $2,374.40 per ounce as of 00:21 ET (04:21 GMT).
Gold’s Rally Anticipates Powell’s Testimony
The rally in gold prices was driven by heightened speculation surrounding a potential interest rate cut in September, particularly as the dollar retreated. Market sentiment focused on the expectation that Powell will adopt a dovish stance during his two-day testimony before Congress, commencing later on Tuesday.
While Powell acknowledged progress towards mitigating inflationary pressures, he also emphasized the Fed’s need for greater confidence before initiating rate cuts.
Market Outlook and Precious Metals Performance
In addition to Powell’s testimony, other Federal Reserve officials are scheduled to speak throughout the week. The upcoming release of the consumer price index (CPI) inflation data is also poised to influence the Fed’s stance on interest rates.
Lower interest rates typically favor gold and other precious metals, diminishing the attractiveness of the dollar and debt instruments, which thrive in high-interest-rate environments.
Broader Trends in Precious and Industrial Metals
Other precious metals also saw gains on Tuesday, with platinum futures rising by 0.7% to $1,022.05 per ounce and silver futures climbing by 1% to $31.218 per ounce. Silver, in particular, has notably outperformed gold in recent months.
Meanwhile, copper prices experienced a modest increase as well, rebounding from losses incurred in June. Market attention remains focused on economic indicators from China, a key importer of copper, with trade and inflation figures slated for later this week. Lingering concerns over a potential trade conflict with Western nations have tempered optimism in the copper market despite recent gains.
As markets await further economic cues and central bank developments, the outlook for both precious and industrial metals remains intricately tied to global economic conditions and monetary policy signals.
