Gold rises as dollar retreats, U.S. inflation data in focus

by Jonathan Adams

Spot gold was 0.5% higher to $2,332.62 per ounce, and U.S. gold futures settled 0.6% higher, to $2,344.40

Gold prices rose on Monday, helped by a pullback in the dollar, while investors looked forward to U.S. inflation data due later this week that could influence the Fed’s monetary policy trajectory.

Spot gold was 0.5% higher to $2,332.62 per ounce, as of 1802 GMT. U.S. gold futures settled 0.6% higher, to $2,344.40.

The dollar dropped 0.3% against its rivals, making gold attractive for holders of other currencies.

Gold is in consolidation mode and there is active buying on dips, said David Meger, director of alternative investments and trading at High Ridge Futures, adding that investors are looking for the trajectory of interest rates moving forward and the timing of those prospective rate cuts.

The focus this week will be on the U.S. Personal Consumption Expenditures (PCE) data, the Federal Reserve’s preferred measure of inflation, due on Friday.

Also on the radar are at least five Fed officials, including San Francisco Fed President Mary Daly and Fed Governors Lisa Cook and Michelle Bowman, who are scheduled to speak this week.

Traders are currently pricing in a 66% possibility of a Fed rate cut in September, shows the CME FedWatch Tool.

We believe gold can reach $3,000/oz over the next 12-18 months, although flows do not justify that price level right now, BofA stated in a research note.

It added: Achieving this would require non-commercial demand to rise from current levels, which in turn needs a Fed rate cut to happen. An inflow into physically backed exchange traded funds (ETFs) and a pick-up in LBMA clearing volumes would be an encouraging first signal.

Lower rates reduce the opportunity cost of holding bullion.

Elsewhere, spot silver was stable, at $29.49 per ounce, and platinum added 0.5%, to $997.80.

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of Trading and Investment News. The information provided on Trading and Investment News is intended for informational purposes only. Trading and Investment News is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.

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