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Gold Prices Dip as Investors Await US Inflation Data and Fed Signals

Gold Prices

Gold prices moderated on Tuesday as investors awaited crucial US inflation data later in the week, which could influence the Federal Reserve’s stance on interest rates. As of 0632 GMT, spot gold slipped by 0.4% to $2,324.69 per ounce, while US gold futures declined 0.3% to $2,336.80.

Kelvin Wong, senior market analyst for Asia Pacific at OANDA, noted technical factors weighing on gold in the short-term following a sell-off last Friday, which many short-term traders interpreted as bearish, leading to subdued movements.

The recent drop in gold prices, over 1% on Friday, coincided with a strengthening dollar after US business activity surged to a 26-month high in June, buoyed by a rebound in employment. This economic backdrop has heightened anticipation for upcoming US economic indicators, including first-quarter GDP estimates on Thursday and the core PCE price index report on Friday.

Wong cautioned that a robust core PCE figure could potentially push gold below the critical $2,300 support level, as lower interest rates diminish the opportunity cost of holding non-yielding assets like gold.

San Francisco Fed Bank President Mary Daly’s comments underscored the Fed’s cautious approach, indicating that rate cuts should wait until inflation trends toward the Fed’s 2% target, despite rising unemployment posing risks.

Throughout the week, market attention will remain on key speeches by Fed Governors Lisa Cook and Michelle Bowman, alongside Richmond Fed President Tom Barkin. Meanwhile, in the precious metals market, spot silver declined 0.5% to $29.50 per ounce, while platinum edged up 0.6% to $1,000.28. Palladium remained flat at $979.30.

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