Tuesday saw a little increase in gold prices as traders awaited American retail sales data to determine whether it would have any bearing on the U.S. Federal Reserve’s plan to continue tightening monetary policy. The dollar was on the verge of reaching its lowest level in almost a year.
By 3:59 GMT, spot gold increased 0.3% to $1,959.54 per ounce. Futures for U.S. gold increased 0.4% to $1,963.70.
The dollar shook close to a more than year-low. For owners of other currencies, a declining dollar makes gold more affordable. [USD/]
Even if the next Fed meeting may momentarily lessen interest in gold, “the Fed is closer to end of tightening cycle,” according to Christopher Wong, executive director and foreign exchange strategist for OCBC.
“At some point, real yields should start to ease lower,” the author writes.
Interest rate futures indicated that markets were expecting a further rate increase of 25 basis points during the Fed’s meeting on July 25–26.
The opportunity cost of owning non-yielding bullion is reduced as interest rates decline.
In addition, Wong said, “We favour long gold as a safe haven substitute against slowing global growth or any risk-off market event.”
Treasury Secretary Janet Yellen stated on Monday that she did not anticipate a recession to hit the American economy.
Investors anticipate that the European Central Bank and the Bank of England will continue to raise interest rates as they work to reduce inflation, which was 5.5% in June and 8.7% in May, to 2%.
The Reserve Bank of Australia’s July policy meeting was held in July, and the minutes from that meeting were released earlier today.
Later in the day, investors will also be keeping an eye on June retail sales figures for the United States, although bad Chinese economic data from the day before will continue to cloud their judgement. [MKTS/GLOB]
Silver spot increased by 0.1% to $24.87 per ounce, platinum increased by 0.7% to $982.43, and palladium increased by 1.1% to $1,298.30.