Gold prices rose on Monday as investors awaited the release of key U.S. inflation data, which could provide additional insight into the U.S. Federal Reserve’s next policy move. In the UAE, gold prices rose AED0.25, with 24-carat gold inching up to AED294.75 while 22-carat gold remained stable at AED272.75. Meanwhile, 21-carat gold reached AED264.25 and 18-carat gold reached AED226.50.
Globally, spot gold edged up 0.23 percent to $2,433.58, as of 5:04 GMT. Meanwhile, U.S. gold futures fell 0.04 percent to $2,472.30.
“Speculators entered the rally very early when gold traded below $2200 which means the market needs a much deeper correction to really upset an elevated hedge fund long. I see support at 2350 followed by the big one at 2280, while resistance around 2435 will be the key to watch,” said Ole Hansen, Head of Commodities Strategy at Saxo Bank in the UAE.
U.S. Inflation Data
Gold prices rose as markets awaited the release of the U.S. consumer price index (CPI) data, due on Wednesday, which will likely show that headline and core prices rose 0.2 percent month-on-month. Market analysts stated that progress on inflation could support gold prices to retest a new all-time high once more.
The market now sees a 54 percent chance of a 50 basis point interest rate cut at the Federal Reserve’s September meeting, according to the CME FedWatch Tool.
Fed Governor Michelle Bowman said on Saturday that she welcomes any progress on inflation even though she believes that it remains uncomfortably above the Fed’s 2 percent target.
“Additionally, the Japanese Yen made a strong comeback against the US dollar, adding further fuel to the fire surrounding volatility in global financial markets. Panic triggered by the Japanese Yen and the Bank of Japan contributed to a sell-off in gold,” said Marc Pussard, Head of Risk, APM Capital, UAE.
In India, gold demand saw a slight increase due to a correction in prices. However, market volatility has led some buyers to delay purchases. The recent reduction in import duties on gold in India is expected to boost demand ahead of the festival season.
“Gold prices have found support in the last two trading sessions at around the $2,380 per ounce level, in part due to dollar weakness and escalating tensions in the Middle East,” added Pussard.
Other Precious Metals
Despite the rise in gold prices, precious metal prices witnessed an overall decline with spot silver inching down 0.21 percent to $27.38 while platinum declined 0.01 percent to $922.10. Palladium fell 0.33 percent to $902.23 while copper lost 0.05 percent to $3.98.
