Gold futures settled at their highest in almost three weeks on Tuesday, finding strength on the back of weakness in the U.S. dollar weakened and a fall in Treasury yields ahead of Wednesday’s release of U.S. inflation data, which are expected to help guide the Federal Reserve’s decision on path for interest rates.
Price action
-
Gold futures for August delivery
GC00,
+0.12% GCQ23,
+0.12%
gained $6.10, or 0.3%, to settle at $1,937.10 per ounce on Comex. That was the lowest most-active contract finish since June 21, according to Dow Jones Market Data. -
Silver futures for September delivery
SI00,
+0.47% SIU23,
+0.47%
fell 6 cents, or 0.3%, to $23.28 per ounce. -
Palladium futures for September
PAU23,
+0.91%
climbed by $11.20, or 0.9%, to $1,247.90 per ounce, while platinum futures for October delivery
PLV23,
+0.56%
fell by $2.40, or 0.3%, to $932.40 per ounce. -
Copper futures for September delivery
HGU23,
-0.09%
fell by 2 cents, or 0.5%, to $3.77 per pound.
Market drivers
Gold and silver received a modest bump from a coterie of factors, including a weaker U.S. dollar and lower Treasury yields.
“We have seen bond yields decline at the start of this week, with investors potentially anticipating a weaker inflation report on Wednesday,” Fawad Razaqzada, market analyst at StoneX, told MarketWatch. “This has reduced the opportunity cost of holding gold over bonds slightly.”
Other than that, gold is probably helped along by the weakness observed in the dollar, especially the likes of the U.S. dollar/Japanese yen and U.S. dollar/Swiss franc pairs, he said, while “short-side profit-taking is an additional reason behind [gold’s] small gains.”
All told, gold is “not out of the woods just yet, with many major central banks still tightening policies,” said Razaqzada.
In Tuesday dealings, the ICE U.S. Dollar Index
DXY,
a closely watched gauge of the dollar’s strength, was down 0.3% at 101.70. The yield on the 10-year Treasury note
TMUBMUSD10Y,
was off by 4.3 basis points at 3.967%.
Traders are looking ahead to Wednesday’s U.S. June inflation report, which is expected to show headline inflation easing to 3.1% while core consumer prices in the U.S. grew by 5% last month, down slightly from May.
“Should the report show further signs of slowing inflation, this could fuel speculation around the Fed’s hiking cycle nearing an end,” said Lukman Otunuga, manager, market analysis at FXTM, in market commentary.
“Such a development could boost attraction for zero-yielding gold, potentially pushing prices beyond the $1,940 region and higher towards $1,960,” he said. However, “should prices remain trapped below $1,932, this could open a path back to $1,910 and $1,900, respectively.”
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