Gold prices experienced a slight uptick on Tuesday as the dollar weakened, although the precious metal remained within a narrow range as traders awaited the release of U.S. inflation data and the Federal Reserve’s policy decision. Spot gold saw a 0.3% increase, reaching $1,962.59 per ounce by 0814 GMT, while U.S. gold futures also rose by 0.3% to $1,975.80.
According to UBS analyst Giovanni Staunovo, significant price movements are unlikely until the U.S. Consumer Price Index (CPI) data is unveiled later in the day. Staunovo noted that the slightly weaker dollar was providing some support to gold, as a weaker dollar makes bullion more attractive to foreign buyers.
Economists polled by Reuters anticipate a 0.2% monthly increase in the U.S. CPI for May, following a 0.4% rise in the previous month. Staunovo suggested that expectations of a potential slowdown in U.S. economic growth could further bolster gold prices. While gold is often considered a hedge against inflation, higher interest rates intended to curb rising prices typically diminish the appeal of the non-yielding asset.
Market participants and major Wall Street banks, as indicated by the CME FedWatch tool, currently see a 76% chance of the Federal Reserve maintaining its interest rates on June 14. However, traders perceive a 56% probability of a 25 basis points rate hike occurring in July.
Meanwhile, base metals experienced price increases on the hope of improved demand following China’s decision to reduce borrowing costs in order to stimulate economic growth. In the United Kingdom, employment and wage growth witnessed significant gains in the three months leading up to April, resulting in a decline in unemployment. These developments have intensified pressure on the Bank of England to raise interest rates later this month.
Gold priced in euros and sterling, however, saw a decline of approximately 0.2%. In other precious metals, silver rose by 0.6% to $24.19 per ounce, platinum gained 0.4% and reached $993.61, while palladium increased by 0.7% to $1,358.72.
ANZ, a leading bank, anticipates platinum prices to approach $1,150 per ounce and palladium to remain near $1,420 per ounce by the end of the year.