Gold prices edged higher on Monday as US Treasury yields declined, with investors eagerly anticipating key US inflation data and comments from Federal Reserve officials throughout the week for insights into the timing of potential interest rate cuts.
Spot gold rose by 0.2% to $2,325.79 per ounce as of 0725 GMT, recovering slightly after a more than 1% decline on Friday. Meanwhile, US gold futures gained 0.3% to reach $2,338.00 per ounce.
The decline in benchmark 10-year US Treasury yields contributed to gold’s appeal as a non-yielding asset, attracting investor interest amidst broader market uncertainties.
Kyle Rodda, a financial market analyst at Capital.com, noted, “Friday night saw a pretty significant sell-off due to the strong US dollar. Gold has been hit by that to some extent, even though the markets are sort of edging towards two rate-cuts this year.”
US business activity showed resilience in June, reaching a 26-month high with an uptick in employment, bolstering the US Dollar to its highest level in nearly eight weeks. A stronger Dollar typically makes gold more expensive for holders of other currencies.
Market attention remains focused on the upcoming US core Personal Consumption Expenditures (PCE) price index report, scheduled for Friday. This report, being the Fed‘s preferred measure of inflation, is pivotal in shaping expectations regarding the timing and scale of potential rate cuts.
Rodda added, “If we continue to see PCE come in on the lower side, it might confirm that the Fed’s in a position to potentially lower rates two times this year. And if we get that, then that’s going to be a fairly positive thing for gold.”
Lower interest rates diminish the opportunity cost of holding non-yielding assets like gold, enhancing its attractiveness to investors.
This week, at least five Fed officials are scheduled to speak, including San Francisco Fed President Mary Daly and Fed Governors Lisa Cook and Michelle Bowman, whose remarks could provide further clarity on monetary policy direction.
In the broader metals market, spot silver rose by 0.3% to $29.59 per ounce, while platinum saw a slight decline of 0.1% to $991.35 per ounce. Palladium recorded notable gains, rising by 1.7% to $964.50 per ounce.
Overall, gold prices are influenced by ongoing developments in US economic data and Fed communications, amidst mixed signals in global markets impacting other precious metals.
