Gold prices saw a modest uptick on Tuesday amidst a weakening dollar, with market focus squarely on Federal Reserve Chair Jerome Powell’s upcoming testimony and forthcoming inflation data for June.
At 0702 GMT, spot gold edged up by 0.2% to reach $2,363.71 per ounce, while U.S. gold futures also strengthened, up 0.3% at $2,369.80.
Powell is set to commence his two-day testimony before Congress, beginning with the Senate today followed by the House on Wednesday. Analysts are closely monitoring his remarks for any signals regarding the state of the U.S. economy, which could sway market expectations on Fed policy.
Kelvin Wong, senior market analyst for Asia Pacific at OANDA, noted, “If Powell’s commentary suggests economic vulnerabilities, direct or implied, it could bolster sentiment towards gold.”
Following last week’s jobs report revealing an uptick in the U.S. unemployment rate to 4.1%, market sentiment has shifted, with futures markets now pricing in a 77% likelihood of a rate cut by September and potential for a second cut by December, according to CME’s Fedwatch Tool.
The allure of non-yielding bullion typically strengthens in environments of lower interest rates. Wong added that softer inflation figures anticipated later this week might propel gold prices towards testing the resistance level of $2,410 in the short term.
Market participants are also awaiting the release of June’s consumer and producer price indexes later this week, which could provide further insights into inflation trends.
According to analysts at Citi, although physical demand for gold softened in the second quarter, a rebound is expected heading into year-end. They highlighted ongoing growth in underlying gold consumption, projecting spot prices could move within the range of $2,400 to $2,600 in the latter half of the year, driven in part by renewed interest from financial investors.
In other precious metals trading, spot silver rose by 0.8% to $31.02 per ounce, platinum edged 1% higher to $1,006.35, and palladium gained 1.1% to $1,020.20 per ounce. Notably, the Guangzhou Futures Exchange announced plans to introduce its inaugural platinum and palladium futures contracts in China.
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