Gold prices were little changed on Tuesday but remained near their lowest level in more than seven weeks, as concerns that the US Federal Reserve could keep interest rates elevated for longer weighed on the market. Investors were also awaiting a series of US economic data releases.
Spot gold was little changed at $4,124.57 an ounce by 01:40 GMT, after hitting its lowest level since August 5 in the previous session. US gold futures fell 0.3% to $4,156.70 an ounce.
“Geopolitical developments will remain crucial for gold, as prolonged tensions could keep energy prices and yields elevated, while tangible progress toward de-escalation could ease the pressure,” said Christopher Taher, a market analyst at Exness.
US and Iranian officials said representatives from the two countries held separate talks with mediators as part of renewed efforts to end the war, which began seven months ago.
Oil prices rose for a second consecutive session amid continued concerns over disruptions to Middle Eastern supplies.
Higher oil prices can fuel inflation by increasing costs across the economy, potentially prompting central banks to raise interest rates to contain price pressures.
Although gold is traditionally viewed as a hedge against inflation, it can come under pressure when interest rates rise, as investors tend to favor assets that generate returns.
According to CME’s FedWatch tool, current market expectations indicate a 70.3% probability that the Federal Reserve will raise interest rates in October.
Investors are awaiting a series of US economic indicators due this week, including job openings, the ADP employment report, personal consumption expenditures data and nonfarm payrolls, in search of further signals on the outlook for monetary policy.
“Persistent price pressures, coupled with strong activity, could strengthen expectations that central banks will need to maintain restrictive policies, keeping yields elevated and leaving gold vulnerable to further losses,” Taher said.
Among other precious metals, spot silver fell 0.6% to $60.62 an ounce, platinum declined 1% to $1,699.86, while palladium dropped 0.5% to $1,209.08.
Source: Reuters
