Gold prices saw a modest increase of approximately 0.30% during the mid-North American session on Tuesday, trading at $2,514 after bouncing from daily lows of $2,500. The uptick comes as traders prepare for the crucial August inflation report from the United States and the first presidential debate between Vice President Kamala Harris and former President Donald Trump, both of which could impact financial markets.
The market sentiment has improved slightly, aided by a pullback in the U.S. Dollar and a decrease in U.S. Treasury bond yields. These factors are favorable for gold, which tends to benefit from a weaker dollar and lower yields. The upcoming Consumer Price Index (CPI) report is expected to provide further insights into inflation and potentially support the Federal Reserve’s (Fed) dovish stance on initiating a rate-cutting cycle amid concerns over a potential labor market slowdown.
Recent U.S. jobs data showed that the economy added fewer jobs than anticipated, but the Unemployment Rate declined, which provided some relief for Fed policymakers.
In the swaps market, expectations for a 50 basis points (bps) rate cut have risen to 33%, while the probability for a 25 bps cut stands at 67%, according to the CME FedWatch Tool. A recent Reuters poll indicates that 92 out of 101 economists foresee the Federal Reserve lowering interest rates by 25 bps at its meeting on September 17-18.
As the U.S. Presidential Election on November 5 approaches, political developments are also capturing attention. The first debate between Vice President Kamala Harris and Donald Trump is scheduled for Tuesday at 21:00 ET (01:00 GMT), and will be broadcast on ABC. This event is expected to draw significant interest and could influence market dynamics in the lead-up to the election.
