Gold Drifts Upwards as Markets Position for Fed Meet, US Economic Data
Gold prices saw a modest increase on Tuesday as the financial world turned its gaze towards the Federal Reserve, anticipating insights into its monetary policy direction. With a significant amount of U.S. economic data set to be released throughout the week, investors are keen to discern more details on the trajectory and extent of potential rate adjustments by the Fed.
As of the late morning trading hours, spot gold experienced a 0.3% rise, reaching $2,391.14 per ounce. Concurrently, U.S. gold futures demonstrated a similar upward trend, marking a 0.4% gain at $2,387.80.
The focal point of the week is the Federal Reserve’s meeting, which concludes on Wednesday. While it is widely expected that the current interest rates will stand pat at the meeting’s end, there is anticipation for signals from the Fed regarding possible policy relaxations by September. This speculation is fueled by inflation rates nearing the central bank’s 2% benchmark.
Additionally, a flurry of U.S. employment data is on the horizon, including the critical non-farm payrolls report slated for release on Friday. “Payrolls data is likely to show a slowdown in added jobs. Any signal from Fed official that a rate cut is near, is the next catalyst, supporting further investment demand for gold,” commented UBS analyst Giovanni Staunovo.
Investment circles are also poised for cues from Fed Chair Jerome Powell in his press conference following the meeting. Powell’s comments could offer pivotal insights into the timing of any forthcoming rate cuts, a scenario that could influence the opportunity costs associated with holding gold, a non-yielding asset.
In related developments, India’s gold consumption in the June quarter experienced a 5% decline on a year-over-year basis. Despite this downturn, expectations for a consumption rebound in the latter half of the year are buoyant, thanks in part to a correction in local prices precipitated by a significant reduction in import taxes, as reported by the World Gold Council.
“However, the record high international prices have impacted consumer demand with global bar and coin demand falling 5% year-on-year and jewellery tumbling down 19%,” stated Andrew Naylor, Head of Middle East and Public Policy at the World Gold Council.
As attention spans beyond just gold, movements were noted in other precious metals as well. Spot silver edged up by 0.1% to $27.90 per ounce, while platinum saw a 0.3% increase to $950.98. Palladium, however, remained steady with no change, trading at $903.75.
This blend of imminent policy announcements and economic data releases has set the stage for potential volatility in the precious metals market, placing investors on high alert for opportunities and risks alike.
