Gold gains as softer US economic data weakens rate-hike expectations, while a weaker dollar and geopolitical tensions boost safe-haven demand.
NEW YORK: Gold prices rose for a third consecutive session on Tuesday as softer US economic data reduced expectations of another Federal Reserve interest rate increase, while a weaker dollar and renewed geopolitical tensions provided additional support to the precious metal.
Spot gold climbed 0.2% to $4,424.28 per ounce by 0130 GMT, while US gold futures for December delivery gained 0.2% to $4,480.90.
The latest advance came as investors assessed a series of weaker-than-expected US economic indicators. Recent data showing unexpected job losses in July, softer consumer inflation and weaker retail sales have prompted markets to reassess the outlook for US monetary policy.
The US dollar remained near multi-month lows against a basket of major currencies. A weaker dollar typically supports gold by making the dollar-denominated metal cheaper for international buyers.
IG market analyst Tony Sycamore said gold was benefiting from the softer economic data, which has strengthened expectations that the Federal Reserve could keep borrowing costs unchanged instead of raising rates.
Gold tends to perform better when interest rates and bond yields fall because bullion does not pay interest or dividends. Lower yields reduce the opportunity cost of holding the non-yielding asset.
According to a recent Reuters poll, most economists expect the Federal Reserve to leave its benchmark interest rate unchanged at its next meeting and maintain that position through the end of the year.
Market expectations have shifted sharply, with traders now pricing in nearly a 65% probability that the Fed will keep rates unchanged in September.
Investors are now awaiting the release of minutes from the Federal Reserve’s latest policy meeting on Wednesday. The minutes could offer fresh clues about policymakers’ views on inflation, employment and future interest-rate decisions.
Geopolitical uncertainty is also supporting demand for gold as a traditional safe-haven asset. Renewed tensions between Iran and the United States have added to concerns in financial markets after diplomatic efforts to reach a permanent end to the conflict stalled.
Other precious metals posted mixed performances. Spot silver rose 0.9% to $66.40 per ounce, while platinum gained 0.2% to $1,772.75. Palladium, however, fell 0.3% to $1,330.05.
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