Gold prices inched up on Tuesday as investors held a positive outlook, anticipating that the U.S. Federal Reserve might hint at a potential interest rate reduction in September during this week's policy meeting. As of 1355 GMT, spot gold had risen by 0.4% to reach $2,392.75 per ounce, while U.S. gold futures increased by 0.5% to $2,389.70.
Phillip Streible, chief market strategist at Blue Line Futures, noted that the gold market has been bolstered by expectations of rate cuts in both Europe and the U.S. in September, due to economic vulnerabilities in Europe and potential policy easing in the U.S. The Fed is anticipated to keep current interest rates steady at the end of its two-day meeting on Wednesday but might hint at a possible policy easing as early as September. The U.S. rate futures market has already factored in a rate cut for September, which would decrease the cost of holding non-yielding gold.
Traders are also looking forward to a series of U.S. employment data releases this week, including the crucial non-farm payrolls report on Friday. U.S. job openings slightly declined in June, but previous data was revised upwards, indicating sustained labor market strength supporting the economy. Ole Hansen, head of commodity strategy at Saxo Bank, commented in a note that while short-term disappointments in gold prices cannot be entirely ruled out, the overall trend towards higher prices in the coming months and quarters remains.
Meanwhile, India's gold demand dropped by 5% in the June quarter compared to the previous year, but the World Gold Council expects consumption to improve in the second half of 2024 due to a local price correction following a significant reduction in import taxes. Among other metals, spot silver increased by 0.3% to $27.94 per ounce, platinum rose by 1.1% to $959.40, and palladium declined by 1.2% to $892.88.
