Gold prices receded on Tuesday, relinquishing some of the previous session’s substantial gains, as investors cautiously turned their attention to riskier assets and awaited further indications of the U.S. central bank’s policy stance.
Spot gold dipped by 0.1% to reach $1,858.64 per ounce at 1:44 p.m. ET (1744 GMT), following a climb to a one-week high earlier in the trading session.
In contrast, U.S. gold futures showed a 0.6% increase, settling at $1,875.30 per ounce.
The rally in gold on Monday, with a 1.6% surge, the most significant one-day gain in five months, was attributed to heightened demand for safe-haven assets driven by military confrontations between Israel and the Palestinian Islamist group Hamas.
However, profit-taking and a growing appetite for risk in the market exerted downward pressure on gold prices. Bart Melek, Head of Commodity Strategies at TD Securities, noted that while the conflict in the Middle East tempered gold’s losses, increased investor appetite for risk was evident. Gold traditionally serves as a refuge for investors during periods of global instability.
In parallel with these developments, Wall Street’s main indices opened on a positive note, although caution was palpable amidst the escalating Middle East tensions.
Market attention is currently focused on two pivotal events: the release of the Federal Reserve’s September monetary policy meeting minutes on Wednesday and the forthcoming U.S. Consumer Prices Index (CPI) data, scheduled for Thursday.
Bart Melek pointed out, “If the CPI report comes in hotter than expected, especially the core number, it will be negative for gold, as it will indicate that the Fed will have to keep rates higher for a more extended period.” The prospect of higher interest rates makes gold less appealing to investors since it doesn’t yield interest.
On another front, influential Federal Reserve officials hinted on Monday that the rise in yields on long-term U.S. Treasury bonds could deter the central bank from implementing further increases in its short-term policy rate.
Looking ahead, Fawad Razaqzada, a market analyst at City Index, identified potential resistance levels for gold, stating, “The next level of potential resistance (for gold) is seen around $1,885, followed by $1,900.”
In other precious metals, spot silver experienced a 0.6% decline, settling at $21.75 per ounce, while platinum saw a 0.7% drop to $879.71. Palladium, on the other hand, demonstrated strength with a 2.5% gain, reaching $1,168.66 per ounce.
