In a day of trading marked by mixed performance, gold prices maintained recent gains on Tuesday. Investors kept a close watch on developments surrounding the Israel-Hamas conflict while shifting their focus to a series of critical U.S. economic indicators scheduled for release later in the week.
The ongoing Israel-Hamas conflict continued to support near-term demand for gold, with spot prices edging higher, primarily driven by safe-haven demand. However, a decline in gold futures indicated that investors remained cautious amid concerns over the prospect of sustained higher interest rates.
Nonetheless, the retreat in the U.S. dollar and a pullback in yields from recent highs provided some respite for bullion prices.
Spot gold recorded a modest increase of 0.1%, reaching $1,975.71 per ounce, while gold futures set to expire in December saw a slight dip of 0.1%, settling at $1,986.55 per ounce by 00:14 ET (04:14 GMT). Both these instruments continued to hover close to a near three-month high.
Over the past two weeks, gold experienced significant gains, primarily triggered by the Israel-Hamas conflict, which prompted investors to seek refuge in safe-haven assets. Market participants are now closely monitoring any potential escalation in the conflict. Recent diplomatic efforts from several world powers appeared to have curbed the chances of a major flare-up.
Yields and Dollar Retreat as Investors Await Economic Data and Fed Insights
In the lead-up to a series of key economic indicators scheduled for release this week, U.S. Treasury yields backed away from multi-month peaks, and the U.S. dollar also saw a decline. Investors adopted a cautious stance ahead of these influential data points.
The U.S. Purchasing Managers’ Index (PMI) data, expected to provide insights into business activity amidst elevated interest rates and persistent inflation, is due later on Tuesday.
Federal Reserve Chair Jerome Powell is set to address the public on Wednesday, potentially offering further guidance on the trajectory of monetary policy. Powell recently reaffirmed the central bank’s intention to maintain higher interest rates and kept alive the possibility of an additional rate hike later in the year.
Powell’s speech precedes a forthcoming Federal Reserve meeting, where it is widely anticipated that interest rates will remain unchanged.
Later this week, third-quarter U.S. gross domestic product data is slated for release, and PCE inflation data—the Fed’s preferred inflation gauge—is set to conclude the week on Friday. Any indications of economic resilience and persistent inflation are likely to bolster the Fed’s commitment to higher rates, potentially impacting gold negatively.
The safe-haven appeal of gold could also diminish if U.S. economic growth remains steady.
Copper Recovers from Near One-Year Low
In the realm of industrial metals, copper prices experienced a slight rebound on Tuesday, recovering from nearly touching a one-year low.
The increase in copper prices was partially attributed to constructive dialogues between U.S. and Chinese officials, which raised hopes of improved relations between these economic giants. However, ongoing concerns regarding China’s property market and other headwinds limited significant gains.
Copper futures set to expire in December registered a 0.4% rise, reaching $3.5927 per pound.
Copper enthusiasts are closely monitoring U.S. economic data releases this week, as any signs of manufacturing resilience point towards heightened copper demand. Nevertheless, given the deteriorating economic conditions globally, the outlook for copper remained somewhat bleak.
