A lower US dollar and speculation that the US Federal Reserve is finished raising interest rates contributed to gold prices reaching a six-month high on Monday. However, attention soon turned to US inflation data that is expected later this week.
By 0404 GMT, spot gold was up 0.4% at $2,009.69 an ounce. Futures for US gold increased by 0.3% to $2,009.50.
The latest lacklustre data has caused the U.S. dollar to decline, which is what is now driving gold prices.
“Economic figures coming out of the U.S. this week, both on the growth and inflation front, will make or break a case for whether gold remains above $2,000.”
Earlier in the day, gold saw a significant increase, reaching a high of $2,017.82 per ounce.
But Rodda continued, “it might have just been characteristic of a sort of thinner Asian market.”
For those holding other currencies, gold became less costly as the dollar index (.DXY) decreased by 0.1% versus its competitors, not far from a level that was hit last week that was more than two months low.
The updated third-quarter GDP numbers for the United States are now expected on Wednesday, while the PCE price index, the favoured inflation indicator of the Federal Reserve, is expected on Thursday.
A different inflation report released earlier this month revealed consumer inflation to be lower than anticipated, raising expectations that the Fed may start reducing monetary policy earlier than anticipated.
While pricing in almost a 60% possibility of a rate drop in May of next year, traders mostly anticipate that the Fed will keep rates constant in December.
The opportunity cost of storing gold that does not bear interest is reduced by lower interest rates.
The Bank of Japan is expected to stop negative rates in 2024, as evidenced by the October services PPI, which increased from a revised 2% in September to 2.3%.
Platinum dropped 0.3% to $927.48 while spot silver increased 1.3% to $24.61 per ounce. An ounce of palladium now costs $1,069.85, up 0.1%.