Gold prices rose on Tuesday after witnessing a sharp decline in the previous session as investors awaited Federal Reserve Chair Jerome Powell’s testimony before Congress and June inflation data for more insight into the central bank’s interest rate cut timing.
In the UAE, gold prices saw an AED0.5 decline with 24-carat gold inching down to AED286.75 per gram, while 22-carat gold declined to AED265.50. Twenty-one-carat gold was at AED257 while 18-carat gold reached AED220.25.
Globally, spot gold gained 0.21 percent to $2,366.74, as of 5:14 GMT. Meanwhile, U.S. gold futures rose 0.40 percent to $2,372.85.
The dollar index declined 0.01 percent to 104.99.
Fed Chair’s testimony
Gold prices rose as markets await Fed Chair Powell’s two-day testimony before Congress, which begins later today with the Senate and tomorrow with the House. Recent weak U.S. economic data has raised the market’s hopes for two interest rate cuts by the end of the year. If Powell implies during his testimony weakness in the U.S. economy, gold prices will likely rise.
On Friday, a U.S. jobs report revealed that the labor market signaled weakness with unemployment rising to 4.1 percent. Markets are pricing in a 77 percent chance of an interest rate cut in September and a second cut by December, according to CME’s Fedwatch Tool. Lower interest rates raise the appeal of non-yielding assets like gold.
In addition, a recent Federal Reserve Bank of New York report stated that the path U.S. inflation is expected to follow over coming years was generally weaker in June amid lower projections of price increases for multiple consumer goods and services.
U.S. inflation data
Markets also await the release of June’s U.S. consumer price index (CPI) and producer price index (PPI) data due on Thursday and Friday, respectively. Softer June inflation readings could raise gold prices above the $2,410 mark in the short term.
Read: What is swing trading? A beginner’s guide to profiting from market fluctuations
Other precious metals
In line with the rise in gold prices, spot silver gained 0.42 percent to $30.92 while palladium rose 0.66 percent to $1,015.61. Copper increased 0.23 percent to $4.63 while platinum inched up 1.09 percent to $1,007.33.
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