Gold prices saw an uptick on Tuesday, buoyed by a decline in the dollar’s strength, while investors eagerly anticipate U.S. inflation data scheduled for later this week to glean insights into potential interest rate adjustments.
At 1:55 p.m. ET (1755 GMT), spot gold edged up by 0.3% to $2,357.44 per ounce, while U.S. gold futures settled 0.9% higher at $2,356.5.
Bart Melek, head of commodity strategies at TD Securities, remarked, “The dollar index is down and we are seeing the yield curve rates drop a little bit. Gold is coming off a correction and is hovering around resistance levels and now it’s bouncing again.”
Melek added, “We continue to be fairly optimistic on gold. I still think that ambiguity of Federal Reserve monetary policy may very well keep gold from taking off and moves be very much data dependent going forward.”
The weakening dollar, slipping to a more than one-week low, rendered gold more affordable for holders of other currencies.
Market focus this week centers on the U.S. core personal consumption expenditures price index (PCE), the Federal Reserve’s preferred measure of inflation, slated for release on Friday.
Last week’s release of Fed meeting minutes indicated a current policy stance of maintaining the benchmark rate at its present level.
Traders are currently pricing in a 63% likelihood of a Fed rate cut by November, a factor that reduces the opportunity cost of holding non-yielding gold due to lower interest rates.
Amelia Xiao Fu, head of commodity market strategy at Bank of China International, expressed, “Gold prices are likely to remain fairly supported by buying-on-dips demand and central bank diversification.”
Central banks globally have been increasing their demand for gold over the past two years as part of efforts to diversify their foreign currency reserves.
Meanwhile, global physically-backed gold exchange-traded funds (ETFs) witnessed net outflows of 11.3 metric tons last week, according to data from the World Gold Council.
In the broader market, silver advanced by 0.9% to $31.95 following a 4.4% surge on Monday, while platinum climbed 0.3% to $1,057.10. Conversely, palladium eased by 1.1% to $978.00.
