Gold prices maintained their strength above the $2,500 mark on Tuesday, as investors braced for upcoming U.S. inflation data, which could provide insights into the Federal Reserve’s next move on interest rates.
As of 14:03 ET (1803 GMT), spot gold rose 0.3% to $2,512.38 per ounce, while U.S. gold futures closed 0.4% higher at $2,543.10. Analysts attribute the precious metal’s steady position to market caution ahead of key economic reports due this week, including the U.S. Consumer Price Index (CPI) data on Wednesday and the Producer Price Index (PPI) on Thursday.
“Gold is trading within a narrow range, with traders awaiting the next catalyst, likely to be the U.S. presidential debate and inflation data,” said Daniel Ghali, commodity strategist at TD Securities.
The August CPI is forecast to show a 0.2% month-over-month increase, the same rate as the previous month, according to a Reuters poll. Analysts believe gold will remain supported above the $2,500 psychological threshold, with investors poised to buy on any dip following the CPI release.
Gold has seen a strong performance this year, gaining 21% and reaching an all-time high of $2,531.60 in August. Lower interest rates tend to benefit gold by reducing the opportunity cost of holding non-yielding assets like bullion.
The market is currently predicting a 67% chance of a 25-basis-point interest rate cut by the Federal Reserve during its Sept. 17-18 meeting, with a smaller 33% chance of a 50-basis-point reduction.
Meanwhile, silver slipped 0.3% to $28.26 per ounce, while platinum inched up 0.2% to $939.71, and palladium saw a 2.1% rise to $966.55.
In the platinum market, the World Platinum Investment Council has revised its 2024 forecast, now expecting the global deficit to be twice as large as previously predicted. The adjustment is due to increased demand from exchange-traded funds and strong bar purchases in China. Analysts at Commerzbank remain optimistic about platinum, stating, “We continue to see significant upside potential for platinum prices.”
