Gold has not yet recovered in Tuesday's trading from its fall yesterday, Monday, and the markets fell before several important data coming from the US economy, in addition to a series of speeches from Federal Reserve officials.
While the yellow metal witnessed strong gains after the start of the war between Hamas and Israel, which pushed investors to safe havens, it reversed course this week after the US inflation reading, which was stronger than expected, led to increased concerns about rising interest rates, according to a number of experts. .
The lack of an immediate escalation in the war also weakened safe-haven demand in the near term, while the dollar found its footing near 11-month highs.
Gold price today
Spot gold contracts (Spot) are trading at $1920.66 per ounce with sideways movement, while gold futures contracts (Futures) record $1933.45 per ounce with sideways movement as well. Both instruments fell by approximately 0.3% yesterday, Monday.
US economic data and Fed comments are ready to be announced
The focus is now on US retail sales and industrial production data due later on Tuesday, with any signs of resilience, particularly in retail spending, indicating elevated expectations for inflation.
Data last week showed a higher-than-expected US consumer inflation reading for September, raising concerns that the Federal Reserve will remain hawkish for longer, in order to bring down flat inflation.
A number of Fed officials are also scheduled to speak this week, most notably Fed Chair Jerome Powell on Thursday. Powell's comments will be closely watched in the wake of the strong inflation readings, given that the Fed chair had signaled longer interest rate hikes at the Fed's previous meeting.
High interest rates do not bode well for gold, since it increases the opportunity cost of investing in the yellow metal. This trade has weighed on gold over the past year, and is expected to limit any significant gains until the Federal Reserve begins cutting interest rates.
Copper decline and Chinese GDP in focus
Among industrial metals, copper prices reversed recent gains on Tuesday, as markets fell ahead of key Chinese economic readings this week.
Copper futures fell 0.5% to $3.5648 per pound.
Also, China's third-quarter GDP data, due on Wednesday, is expected to show a further deterioration in growth in the world's largest copper importer.
September industrial production data - also due on Wednesday - is expected to show continued weakness in the sector, which accounts for the bulk of Chinese copper demand.
However, copper bulls received some encouragement from quarterly production numbers from major miner Rio Tinto (RIO) Ltd (ASX:RIO). The miner recorded slightly stronger shipments of iron ore and copper with steady demand in China.
