Gold surged back up above the important $2,000 barrier on Tuesday as the dollar fell off last session’s peak.
As traders hunkered down for Wednesday’s U.S. inflation data for indications on future interest rate hikes.
Spot gold increased 0.8% to $2,005.79 per ounce by 2:00 p.m. EDT (1800 GMT) while U.S. gold futures finished 0.8% higher at $2,019.00.
Following a rebound in the previous session, gold gained some relief from a pause in the dollar, which also helped counteract pressure from increased Treasury yields.
At this stage of the game, the market isn’t too bothered on whether we receive another 25 basis points” from the Federal Reserve in May, said Bart Melek, head of commodity strategies at TD Securities.
As we approach farther into the second half of 2023, the market is signalling lower rates and looking at the pivot.
While Chicago Fed President Austan Goolsbee said the central bank should be cautious about raising interest rates in light of recent banking stress.
New York Fed President John Williams said the prospect of the Fed raising its benchmark interest rate by 25 basis points just once more is a useful starting point.
Gold lost about 1% on Monday after solid U.S. jobs data on Friday elevated the probability of a May rate hike to roughly 70%.
The U.S. consumer price index (CPI) statistics on Wednesday could give hints on how long the Fed will continue its war against inflation.
Real yields may swing higher, raising the opportunity cost of keeping gold, should CPI surge higher.
And support tightening of monetary policy following solid non-form payroll numbers. Warren Venketas, a DailyFX analyst, stated in a note.
Risks to financial stability should not cause central banks to stop fighting inflation, according to IMF head economist Pierre-Olivier Gourinchas.
Palladium increased 3% to $1,454.17, platinum increased 0.6% to $997.20, and silver increased 0.8% to $25.08 per ounce.
