Gold prices rose modestly on Tuesday as investors weighed conflicting statements over possible U.S.-Iran talks while awaiting a series of U.S. labor market reports that could provide fresh signals on the Federal Reserve’s interest rate path.
Spot gold gained 0.2% to $4,059.81 per ounce as of 0257 GMT.
Market participants are closely watching several key U.S. employment reports this week, including Job Openings (JOLTS) data due later on Tuesday, the ADP private payrolls report on Wednesday, and the closely watched nonfarm payrolls report on Friday.
Ajay Kedia, director of Mumbai-based Kedia Commodities, said gold is currently trading in a consolidation phase.
“If we see weakness in the labor market, it could put pressure on the U.S. dollar, which would in turn support gains in gold,” Kedia said.
On Monday, U.S. President Donald Trump said negotiations with Iran were underway, describing them as Tehran’s “last chance” to secure a favorable agreement to end the five-month conflict. Iran, however, denied that any negotiations were taking place or planned.
The conflict has driven up energy costs and intensified inflation concerns, raising expectations that central banks may need to increase interest rates to contain price pressures. While gold is traditionally viewed as a hedge against inflation, higher interest rates tend to reduce the appeal of the non-yielding precious metal.
Traders are currently pricing in a 65% probability that the Federal Reserve will raise interest rates in September, following the central bank’s decision to leave rates unchanged at its previous policy meeting despite divisions among policymakers.
Kedia said that any reduction in market expectations for a September rate hike would likely provide further support for gold prices.
Meanwhile, John Williams, President of the Federal Reserve Bank of New York, said he remains optimistic that inflationary pressures are gradually easing but stressed that the U.S. central bank would not hesitate to raise interest rates if inflation fails to continue moderating.
In a research note, Citibank forecast that gold prices are likely to remain stable or even decline over the coming month before resuming their upward trend, reaching $4,500 per ounce in the fourth quarter of this year and $5,000 per ounce by the first half of next year.
Among other precious metals:
* Spot silver rose 1.0% to $58.74 per ounce.
* Platinum gained 1.2% to $1,646.59 per ounce.
* Palladium advanced 1.2% to $1,279.55 per ounce.
Source: Reuters
