Gold prices experienced mixed trading on Tuesday as investors monitored developments in the Israel-Hamas war and awaited a series of crucial U.S. economic reports scheduled for this week. The near-term demand for gold remained strong as the conflict fueled safe-haven buying, but concerns over rising interest rates kept gold futures in check.
Despite the cautious sentiment, a drop in the dollar and yields provided some relief to gold prices. Spot gold saw a slight increase of 0.1% to $1,975.71 per ounce, while gold futures for December delivery dipped 0.1% to $1,986.55 per ounce. Both remained near a three-month high.
Gold had seen significant gains in recent weeks due to the outbreak of the Israel-Hamas conflict, leading investors to seek safe-haven assets. However, recent diplomatic efforts from world powers have managed to ease tensions, reducing the likelihood of further escalation.
Market focus has also turned to key economic indicators and Federal Reserve cues. Treasury yields and the dollar retreated from multi-month highs as investors awaited the release of U.S. purchasing managers’ index (PMI) data, which will provide insights into business activity amid high interest rates and inflationary pressures. Federal Reserve Chair Jerome Powell’s speech on Wednesday is expected to shed light on the path of monetary policy. Powell had recently reiterated the intention to maintain higher rates for an extended period and left the possibility of one more rate hike this year.
Later in the week, investors will closely watch third-quarter U.S. gross domestic product (GDP) data and personal consumption expenditures (PCE) inflation data, the Fed’s preferred inflation gauge. Economic resilience and persistent inflation could strengthen the case for maintaining higher interest rates, potentially dampening demand for gold as a safe-haven asset.
Meanwhile, copper prices showed a slight recovery from a nearly one-year low. Positive dialogue between U.S. and Chinese officials raised hopes for improved relations between the economic powerhouses. However, concerns over China’s property market continue to exert pressure on copper prices. Copper futures for December delivery rose 0.4% to $3.5927 per pound.
Copper traders will closely monitor U.S. economic data, specifically indicators of manufacturing resilience, to gauge demand for the industrial metal. However, with deteriorating economic conditions globally, the outlook for copper remains cautious.