In anticipation of important economic data due this week from China and the United States, as well as the imminent speech by U.S. Federal Reserve Chair Jerome Powell, gold prices increased on Tuesday on a lower dollar. These factors helped investors predict how rate hikes would play out.
By 0402 GMT, spot gold had increased 0.3% to $1,928.14 per ounce, while U.S. gold futures had increased 0.2% to $1,937.70.
“Gold may stumble but remain muted as silver, platinum, and palladium rise,” said Ilya Spivak, head of global macro at Tastylive, “if the dollar falls but yields edge up (softer Fed tone, neutral/upbeat data),”
Looking ahead, “(gold) will continue to try to reconcile) this hawkish central bank turn with signs of a deepening slowdown in global economic activity.”
Foreign purchasers will now find dollar-priced bullion more alluring as the dollar index dipped by 0.1%. [USD/]
Benchmark U.S. yields increased from a nearly three-week low the previous day to session highs. [US/]
This week’s economic data, which includes the Purchasing Managers’ Index for China and an important inflation indicator for the United States, may help to clarify the current position.
On Wednesday at 13:30 GMT, Fed Chair Jerome Powell will appear at the policy panel on banking before the European Central Bank Forum in Sintra.
Concerningly, the core reading for personal consumption expenditures is projected to remain constant at 4.7%. If traders perceive such a result as calling additional hikes this year, market-wide risk appetite appears likely to weaken,” Spivak highlighted.[MKTS/GLOB]
Investors currently anticipate a 74% chance of a rate increase in July, with rate reduction anticipated starting in 2024.
Non-yielding gold is a secure investment during economic uncertainty, but high interest rates discourage investing in it.
Investors in China, the world’s largest buyer of gold, will also be watching industrial earnings for May on Wednesday and the manufacturing and non-manufacturing purchasing managers’ index (PMI) for June on Friday. These data could give investors ideas about potential new stimulus measures to support the recovery of the economy.
Platinum increased by 0.8% to $931.15, palladium increased by 1% to $1,318.99, while spot silver increased by 0.6% to $22.89 per ounce.