In anticipation of this week’s economic data and Federal Reserve Chair Jerome Powell’s speech, which may influence future interest rate decisions, gold prices declined on Tuesday as the U.S. dollar and Treasury rates increased.
As of 03:26 GMT, spot gold was down 0.3% to $1,913.90 per ounce, and U.S. gold futures were down 0.4% to $1,925.80.
Prior to later in the day’s U.S. retail sales and industrial production, U.S. Treasury rates increased to their highest levels in more than a week. The dollar also climbed, making non-yielding bullion more expensive for holders of other currencies.
Since markets are only putting in a 10% possibility of a Fed hike in November and U.S. economic data is still quite strong, the positive surprise demonstrates the country’s resilience.
Following dovish indications from key policymakers in recent weeks, markets predict that Powell’s planned speech on Thursday may provide additional clarity on the U.S. central bank’s rate position.
The opportunity cost of owning gold, a non-yielding asset, rises when interest rates rise.
The market was also more unpredictable as a result of the Middle East tensions, which on Friday drove safe-haven gold prices to more than three-week highs.
In the near future, the markets are keeping an eye out for a potential ground invasion by Israel into the Gaza Strip, which, according to Rodda, would almost certainly spark another increase in gold prices.
The largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, reported on Monday that its holdings decreased 0.80% to 855.45 tonnes as a result of falling gold prices.
Other metals saw stable prices for palladium at $1,142.98, platinum dropped 0.2% to $889.31, while spot silver slipped 0.7% to $22.44 per ounce.