Gold prices saw a decline to a near one-week low on Tuesday, primarily influenced by a firmer dollar and reduced safe-haven demand. Investors anxiously awaited comments from Federal Reserve officials, including Chair Jerome Powell, to gain more insight into the future of interest rates.
Spot gold slipped by 0.2%, reaching $1,972.89 per ounce as of 0328 GMT, while U.S. gold futures experienced a 0.5% drop to $1,979.50.
The dollar displayed a 0.1% rise after previously hitting a six-week low, effectively making gold more expensive for holders of other currencies.
Kyle Rodda, a financial market analyst at Capital.com, explained the current market dynamics, stating, “At the moment it’s really still a story about geopolitical risk, and the margins of risks would seem to have diminished a little bit in gold, and prices are reflecting that.”
In the backdrop, Prime Minister Benjamin Netanyahu expressed that Israel would contemplate “tactical little pauses” in the Gaza conflict to facilitate humanitarian aid access or hostage releases. However, he continued to reject calls for a general ceasefire despite mounting international pressure.
In terms of monetary policy, investors increasingly believed that the Federal Reserve might have concluded its rate hikes after last week’s soft U.S. October non-farm payrolls data. Nonetheless, Fed Bank of Minneapolis President Neel Kashkari cautioned that the central bank might still need to take further measures to control inflation.
Kyle Rodda further added, “The things that could drive volatility are the speeches from Powell. Also, the treasury auctions over the next couple of days, and if we see some sort of tepid demand… that could put upward pressure on yields again, and put some downside pressure on gold.”
Investors are now eagerly anticipating Powell’s upcoming speeches scheduled for Wednesday and Thursday, seeking continuity in the dovish tone he adopted after the recent Fed meeting.
Additionally, the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, reported a 0.50% increase in holdings, reaching 867.57 tonnes on Monday.
While gold saw a dip, spot silver experienced a 0.6% decrease, reaching $22.86 per ounce, platinum eased by 0.2% to $902.96, and palladium slipped by 0.2% to $1,104.92.
