Gold Prices Edge Down Ahead of Key U.S. Inflation Data
Investors Await U.S. Inflation Data for Federal Reserve Clues
Gold prices edged down on Tuesday as investors awaited key U.S. inflation data that could provide insights into the Federal Reserve's future interest rate decisions. Spot gold fell by 0.3% to $2,342.80 per ounce as of 0732 GMT, after rising about 1% on Monday. U.S. gold futures, however, were up 0.4% at $2,343.80.
Impact of U.S. Monetary Policy on Gold Prices
"A very strong dollar picture supported by a change in the U.S. monetary policy stance where the Fed starts looking for evidence to kick start interest rate hikes instead of easing could be a major risk as we could see a further corrective move in spot gold," said Kelvin Wong, a senior market analyst for Asia Pacific at OANDA. Despite this, Wong noted that in the short term, spot gold is still skewed towards the positive side, with $2,310 being a key short-term support level for this week.
Key Economic Data to Watch
The core personal consumption expenditures price index (PCE), which is the Fed's preferred inflation measure, is due on Friday. Recent Fed meeting minutes indicated that while the current policy response involves maintaining the benchmark policy rate, there were discussions about potential further rate hikes. According to the CME FedWatch Tool, traders are pricing in about a 63% chance of a rate cut by November.
Gold as an Inflation Hedge
Gold is traditionally seen as a hedge against inflation, but higher interest rates increase the opportunity cost of holding non-yielding bullion. Spot gold may break the nearest resistance at $2,357 per ounce and rise towards the $2,363-$2,373 range, according to Reuters technical analyst Wang Tao.
Other Precious Metals
In other precious metals, spot silver fell by 0.8% to $31.42 per ounce. Platinum was down by 0.7% at $1,047.20, and palladium lost 0.7% to $982.24. Additionally, Vietnam's central bank announced it would stop auctioning gold in the domestic market and introduce new measures to stabilize domestic prices.
