Gold prices gained on Tuesday, supported by a weaker dollar and falling US Treasury yields, as investors awaited key inflation data to assess the Federal Reserve’s policy direction amid growing trade tensions and concerns over an economic slowdown.
As of 0501 GMT, spot gold rose 0.3% to $2,898.27 per ounce, while US gold futures inched up by 0.1% to $2,902.50. The dollar index remained near a four-month low reached last week, making gold more affordable for buyers holding other currencies, while benchmark 10-year US Treasury yields also declined.
“The US dollar and Treasury yields are lower, which is providing some support for gold,” said Ilya Spivak, head of global macro at Tastylive. “The overall uptrend remains intact, and the path of least resistance favors the upside.”
Gold prices have remained relatively stable within a range of $2,830 to $2,960 for the past four weeks. Spivak noted that a decisive break above or below these levels would signal a potential shift in the market’s direction.
The market also reacted to US President Donald Trump’s comments in a Fox News interview on Sunday, where he refrained from predicting whether his tariffs would lead to a US recession, contributing to a global stock market decline. Trump had imposed a 25% tariff on imports from Mexico and Canada last Tuesday, along with new duties on Chinese goods. However, he later exempted many Mexican and Canadian imports from these tariffs for a month, creating uncertainty and fueling concerns over US inflation and growth.
With inflation data from the US Consumer Price Index (CPI) scheduled for release on Wednesday, investors are eager to analyze the Fed‘s likely stance on interest rates. Gold, traditionally seen as a hedge against political risk and inflation, could face challenges if rising inflation prompts the Fed to maintain higher interest rates, potentially diminishing the appeal of the non-yielding asset.
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