BY COMFORT OGBONNA
Gold prices recovered on Tuesday after falling to a two-week low earlier in the session, as investors turned their attention to upcoming U.S. inflation data and increasing tensions between the United States and Iran. Rising oil prices and growing expectations of further Federal Reserve interest rate increases influenced market movements.
Spot gold gained 0.3% to $4,013.93 per ounce by 0300 GMT, recovering from its lowest level since July 1. U.S. gold futures for August delivery also moved higher, rising 0.4% to $4,020.80 per ounce.
Investors are closely watching the release of June U.S. Consumer Price Index (CPI) data, which is expected to provide important signals about the direction of inflation and the Federal Reserve’s future monetary policy decisions. Additional market attention is focused on upcoming Producer Price Index (PPI) data and Federal Reserve Chair Kevin Warsh’s first semiannual testimony before Congress.
The latest inflation figures could play a major role in determining whether the central bank moves toward additional interest rate increases. Federal Reserve Governor Christopher Waller said that interest rates may need to rise in the near term if economic data shows inflation remains significantly above the Fed’s 2% target.
Expectations for a possible rate hike have increased among traders. According to the CME Group’s FedWatch Tool, markets are now pricing in a roughly 76% chance of a U.S. interest rate increase in September, up sharply from about 57% one week earlier.
Gold, often viewed as a safe-haven asset during periods of economic and geopolitical uncertainty, has received support from renewed concerns over global instability. Escalating tensions between Washington and Tehran have pushed oil prices higher, increasing worries that energy market disruptions could contribute to inflation pressures.
Higher interest rates typically create challenges for gold because the precious metal does not generate interest income. However, investors continue to seek protection in gold during periods of uncertainty surrounding global conflicts, inflation risks, and financial market volatility.
Other precious metals showed mixed performance during Tuesday’s trading session. Spot silver slipped 0.1% to $57.60 per ounce after earlier reaching a two-week low. Platinum declined 0.5% to $1,597.52, while palladium gained 0.6% to $1,254.82.
Market participants are now waiting for further economic signals from the United States, with inflation figures and Federal Reserve commentary expected to determine the next major move for precious metals and global financial markets.
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