Gold prices fall ahead of key U.S. inflation data amid Federal Reserve policy speculation
Date
6/25/2024 4:39:25 AM
(MENAFN) Gold prices experienced a decline on Tuesday as investors turned their attention to crucial US inflation data set for release later this week, which could provide insights into the Federal Reserve's stance on future interest rate adjustments. By 0339 GMT, the price of gold in spot transactions had decreased by 0.2 percent, settling at USD2,327.52 per ounce, while US gold futures mirrored this trend, also falling by 0.2 percent to USD2,339.90 per ounce. The yellow metal had already seen a significant drop of more than 1 percent on Friday, triggered by a surge in the US dollar following a marked increase in business activities in the United States. This increase, which occurred in June, saw business activities reaching their highest level in 26 months, buoyed by a recovery in employment rates.
This week, the market is anticipating the release of several important economic reports. The US first-quarter GDP estimates are scheduled for Thursday, and the Personal Consumption Expenditures (PCE) Price Index report, a key indicator of inflation, is due on Friday. These reports are expected to influence the Federal Reserve's decisions regarding interest rates. Lower interest rates typically reduce the opportunity cost of holding non-yielding assets like gold, potentially making it more attractive to investors.
In related news, Mary Daly, President of the Federal Reserve Bank of San Francisco, commented on Monday that she did not believe the central bank should reduce interest rates until policymakers were assured that inflation was on a path toward the target rate of 2 percent. However, Daly also acknowledged that rising unemployment posed an increasing risk, highlighting the delicate balance the Federal Reserve must maintain in its economic policy.
Other precious metals experienced mixed movements in the market. Silver saw a 0.5 percent decline in spot transactions, dropping to USD29.47 per ounce. In contrast, platinum prices rose by 0.5 percent, reaching USD999.70 per ounce. Palladium experienced a notable increase of 1.5 percent, trading at USD993.83 per ounce after hitting its highest level in a month on Friday. These fluctuations reflect the varied responses of different precious metals to the current economic conditions and investor sentiments.
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