Gold prices fell during these trading moments on Tuesday, as the US dollar rose, as investors looked to this week's key economic data for more clues about how long interest rates could continue to rise to suppress inflation.
Yesterday, Monday, the head of the Federal Reserve Bank of Chicago said that the Fed is on a golden path to reduce inflation, stressing that efforts to limit price increases are successful.
Gold and the dollar now
Gold futures fell 0.76% to $1,994 an ounce.
While spot contracts for gold fell by 0.47% to 1956 dollars an ounce.
On the other hand, the dollar index rose by 0.16% to 101.782 points.
gold when settling yesterday
Gold prices rose at the end of trading, yesterday, Monday, in conjunction with the decline in the performance of the dollar and expectations regarding the arrival of most central banks around the world to the peak of interest rates.
Gold futures rose at settlement by $9.5, equivalent to an increase of approximately 0.50%, to record $1979.6 an ounce.
milestone data
Gold prices closed July 2.3% higher, the largest monthly gain in four months amid expectations of the near end of the interest rate hike cycle by global central banks. As low interest rates boost the demand for zero-yield bullion.
Tim Waterer, Senior Market Analyst at KCM Trade said: Inflation is going down but the question is whether the de-inflation process is happening fast enough for central bankers around the world, which is why central banks stick to their mantra that they will rely on data.
Waterer added that the US employment data due later this week will be the deciding factor in the interest rate outlook from the Fed, and any bullish surprises may remind traders that another rate hike is still possible, which will negatively affect gold.
The data of the Federal Interest Follow-up Tool on Saudi Arabia’s Investing show that the rate of expectation of the Fed’s interest rate fixation will reach 60% during the current year, in addition to the indication by monetary policy makers at the European Central Bank during the last meeting of the possibility of stopping raising interest in the future.
The dollar index rose after a Federal Reserve survey showed that US banks reported tighter credit standards and weaker loan demand from both businesses and consumers during the second quarter.
Among other precious metals, spot silver fell 0.5% to $24.64 an ounce. Platinum fell 0.3% to $946.47, and palladium fell 0.6% to $1,274.54.
Fed remarks yesterday
The head of the Federal Reserve Bank of Chicago said on Monday that the Federal Reserve is on the golden path, stressing that efforts to reduce inflation are still working.
Austin Goolsby explained during an interview with Yahoo Finance, commenting on the US economic data, saying: The monthly inflation readings were very good, and despite the continued slow decline in the pace of inflation in the services sector, it witnessed an improvement.
The policy maker had earlier made clear what he meant by the golden road, i.e. reducing inflation at a more sustainable pace, without recession.
With regard to the tightening of credit conditions, Goolsby explained that there was no tightening in credit conditions more than expected, due to the impact of raising interest rates.
A member of the Federal Open Market Committee at the Central Bank added that he relies on the data approach in determining his decision on interest rates, stressing that he has not made up his mind about the September meeting.
