Gold Prices Mixed as Yield Rally Cools, US Data Barrage in Focus
Gold Prices Retain Recent Gains Amid Israel-Hamas Conflict and US Economic Readings
Gold prices traded in a mixed range on Tuesday, holding onto recent gains as traders closely monitored developments in the Israel-Hamas war. Additionally, attention turned to a series of crucial U.S. economic readings scheduled for this week.
Near-term demand for gold remained strong, driven by the Israel-Hamas conflict, which increased safe haven demand. However, a drop in yields indicated that gold bulls were cautious about higher interest rates in the long run.
Fortunately, a decline in the dollar and yields from recent peaks provided some relief to bullion prices.
Spot gold saw a 0.1% increase, reaching $1,975.71 per ounce, while gold futures expiring in December fell by 0.1%, settling at $1,986.55 per ounce by 00:14 ET (04:14 GMT). Both instruments remained close to a near three-month high.
Israel-Hamas Conflict and Economic Readings Impact Gold Prices
The yellow metal experienced significant gains over the past two weeks due to the Israel-Hamas war, which prompted investors to seek safe havens. Although recent diplomatic missions from various world powers seemed to prevent any major escalation, the market is still attentive to potential developments in the conflict.
Meanwhile, Treasury yields and the dollar retreated ahead of key economic cues scheduled for this week.
Later on Tuesday, U.S. Purchasing Managers’ Index (PMI) data will provide further insights into business activity against the backdrop of high interest rates and persistent inflation.
Furthermore, Federal Reserve Chair Jerome Powell is set to deliver a speech on Wednesday, which could offer additional clues about the future of monetary policy. Powell recently reiterated the Fed’s intention to maintain higher rates for an extended period and left the possibility of one more rate hike this year open.
Powell’s speech coincides with the upcoming Federal Open Market Committee meeting, where the central bank is expected to keep rates unchanged.
Later this week, third-quarter U.S. GDP data and the Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) index, will be released. Positive economic indicators and persistent inflationary pressures will further solidify the case for higher rates, which could negatively impact gold prices.
It is crucial to monitor U.S. economic growth as it may affect the demand for gold as a safe haven asset.
Copper Prices Recover from One-Year Low
Copper prices slightly rebounded on Tuesday, following a significant drop nearing a one-year low.
Positive sentiment arose from ongoing discussions between U.S. and Chinese officials, signaling potential improvements in relations between the two economic giants. However, concerns over China’s property market limited substantial gains.
Copper futures expiring in December rose by 0.4%, reaching $3.5927 per pound.
The global economic conditions and U.S. economic readings this week will heavily influence copper prices. Resilience in manufacturing activities suggests an uptick in copper demand. However, given the deteriorating economic conditions worldwide, the outlook for copper remains uncertain.
Overall, gold and copper prices are expected to be strongly influenced by the ongoing Israel-Hamas conflict, U.S. economic readings, and global economic conditions. Traders and investors need to closely monitor these factors to make informed decisions.