Gold Rises on Softer Dollar as Attention Turns to US Inflation Data – Reuters

By Brijesh Patel

Gold prices experienced an increase on Tuesday, bolstered by a weaker dollar as investors await U.S. inflation data later this week for insights on interest rate adjustments.

By 1:55 p.m. ET (1755 GMT), gold was trading up 0.3% at $2,357.44 per ounce, while U.S. gold futures settled 0.9% higher at $2,356.50.

"The dollar is down, and we are seeing a slight drop in yield curve rates. Gold is recovering after a correction and is now testing resistance levels," noted Bart Melek, head of commodity strategies at TD Securities. "We maintain a positive outlook on gold, but ongoing uncertainty regarding Federal Reserve monetary policy is likely to keep gold’s movement data-dependent."

The dollar has fallen to its lowest point in over a week, making gold more affordable for holders of other currencies. This week, attention will turn to the U.S. core personal consumption expenditures price index (PCE), the Federal Reserve’s preferred measure of inflation, which is set to be released on Friday.

Recent minutes from the Fed meeting indicated that, for the moment, policymakers plan to keep the benchmark interest rate steady. Traders are estimating around a 63% chance of a Fed rate cut by November, as lower interest rates diminish the opportunity cost of holding non-yielding gold.

"Gold prices are likely to find support from demand on dips and central bank diversification," stated Amelia Xiao Fu, head of commodity market strategy at Bank of China International.

Central bank demand for gold has remained robust over the past two years as these institutions seek to diversify their foreign currency reserves.

Additionally, global physically-backed gold exchange-traded funds (ETFs) experienced net outflows of 11.3 metric tons last week, according to the World Gold Council.

In other precious metals, silver rose 0.9% to $31.95 after a 4.4% increase on Monday. Platinum saw a 0.3% increase to $1,057.10, while palladium fell by 1.1% to $978.00.