Gold Prices Fluctuate Amidst Economic Data Outlook
Gold prices experienced slight fluctuations on Tuesday, with spot gold recording a modest 0.08 percent decline to $2,348.88 per ounce globally. In the UAE, gold prices witnessed a marginal increase, with 24-carat gold rising to AED284.50 per gram and 22-carat gold reaching AED263.50. Additionally, 21-carat gold inched up to AED255.00, while 18-carat gold reached AED218.50.
Impact of Economic Data
Traders are closely monitoring U.S. economic data following indications of stabilized inflation. Recent reports suggested that inflation levels have steadied, sparking hopes for a potential interest rate cut by the Federal Reserve later in the year. However, gold prices experienced a subtle decline amidst this outlook, despite gaining 1.05 percent over the past month.
US Dollar Index and Gold
The U.S. dollar index exhibited a marginal decline against a basket of currencies, rendering gold more attractive for foreign currency holders. Despite the minor dip in gold prices, the allure of the precious metal remains intact for investors amidst evolving economic conditions.
Upcoming Data Releases
Anticipation surrounds upcoming U.S. economic data releases, including the ADP employment report scheduled for Wednesday and non-farm payroll data due on Friday. These reports offer insights into the health of the U.S. economy and potential implications for Federal Reserve policy rates.
Gold as an Inflation Hedge
Gold prices found support following softer-than-expected personal consumption expenditures (PCE) data, reinforcing investor expectations of a rate cut. The stability of inflation in April heightened the probability of a September interest rate cut, with the CME FedWatch tool indicating a 60 percent chance. Gold traditionally serves as an inflation hedge, but higher interest rates may diminish its appeal due to increased opportunity costs.
Other Precious Metals Performance
In addition to gold, other precious metals experienced varied performance. Spot silver saw a 0.43 percent decline to $30.63, while spot palladium registered a 0.56 percent increase to $922.75. Meanwhile, platinum rose by 0.37 percent to $1,015.24, reflecting a diverse landscape within the precious metals market.
