Gold prices dipped slightly on Tuesday, with investors eagerly awaiting key U.S. inflation data set to be released later this week. This data could provide insights into when the Federal Reserve might decide to cut interest rates.
FUNDAMENTALS
* Currently, spot gold is down 0.1% at $2,329.64 per ounce, while U.S. gold futures have also decreased by 0.1% to $2,342.00.
* Mary Daly, the President of the San Francisco Federal Reserve Bank, stated on Monday that the central bank should not lower rates until they are confident that inflation is moving towards the 2% target.
* Traders are eagerly anticipating the release of the U.S. core personal consumption expenditures (PCE) price index report on Friday, as it is the Fed’s preferred gauge of inflation. This report will likely provide further insights into the timing and extent of potential rate cuts.
* In addition to the inflation data, investors are looking forward to hearing from Fed officials scheduled to speak this week, including Fed Governors Lisa Cook and Michelle Bowman.
* Currently, traders are pricing in a 68% chance of a Fed rate cut in September, according to the CME FedWatch Tool.
* The decrease in interest rates diminishes the opportunity cost associated with holding non-yielding gold.
* Meanwhile, in China, retailers are facing challenges following a disappointing mid-year online shopping festival. This has also cast a shadow on the recovery outlook for the world’s second-largest economy.
* Palladium prices in London surged to a one-month high and briefly surpassed the crucial $1,000 per troy ounce level last week due to some investors covering their short positions and a tight market for nearby physical supply.
* Other precious metals saw mixed movements, with spot silver dropping 0.3% to $29.53 per ounce, platinum increasing by 0.7% to $1,001.25, and palladium rising by nearly 1% to $987.91.
DATA/EVENTS (GMT)
0500 Japan Chain Store Sales YY May
1400 US Consumer Confidence June
(Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing
by Sherry Jacob-Phillips)
Additional Insight: The fluctuations in gold prices are heavily influenced by economic data and central bank policies. Investors closely monitor inflation data and statements from Fed officials to gauge the direction of interest rates and adjust their investment strategies accordingly. The impact of global economic events, such as online shopping festivals in major consumer markets like China, also plays a significant role in shaping market sentiment towards gold and other precious metals.
