Gold prices slipped on Tuesday as traders assessed the impact of tensions in the Middle East and awaited key U.S. labor market data due this week, which could influence expectations for the Federal Reserve’s monetary policy.
Spot gold fell 0.3% to $4,437.10 an ounce by 0235 GMT, after hitting its lowest level since Aug. 19 in the previous session.
U.S. gold futures rose 0.1% to $4,485.30 an ounce.
Key U.S. data due this week include job openings, the ADP employment report and nonfarm payrolls. Investors will closely examine the figures for indications of the health of the labor market and the outlook for interest rates.
Spot gold reached its highest level in more than three months last week before falling more than 3% on Friday after Federal Reserve Chair Kevin Warsh said the U.S. central bank “has work to do” if policymakers do not gain sufficient confidence that inflation is moving toward the 2% target.
Tony Sycamore, a market analyst at IG, said gold had come under pressure from “Fed Chair Warsh’s hawkish rhetoric at Jackson Hole, as well as renewed tensions around the Strait of Hormuz, which pushed oil prices higher and increased inflation expectations.”
“One rate hike in isolation should not be a game changer for gold, but two or three could be,” he added.
Markets are currently pricing in a 66% probability of a U.S. rate hike in September, according to CME Group’s FedWatch tool, and an 89% probability of a hike in December.
Although gold is considered a hedge against inflation, higher interest rates typically weigh on the metal by increasing the appeal of yield-generating assets.
U.S. President Donald Trump told reporters in the Oval Office that he has great respect for Warsh and that he “will do what he has to do” regarding interest rates.
Meanwhile, Trump threatened further strikes on Iran on Monday following the first direct exchange of attacks between the two sides in a month, escalating tensions in a conflict that has recently evolved into an economic confrontation. Oil prices rose for a second consecutive session.
Among other precious metals, spot silver rose 0.3% to $66.34 an ounce, platinum gained 0.1% to $1,793.03, while palladium was unchanged at $1,356.75.
Source: Reuters
