Gold fell as the dollar strengthened and markets awaited economic data in early trade

1 Aug 2023 , 09:49 AM

Gold prices fell on Tuesday as the US dollar strengthened, while investors awaited critical economic data this week to gauge the duration of potential interest rate hikes to combat sticky inflation.

Spot gold was down 0.1% at $1,963.04 per ounce, while US gold futures were down 0.4% at $1,962.90 per ounce.

In July, gold prices ended 2.3% higher, marking the highest monthly gain in four months, driven by investor expectations that the global central banks’ rate-hiking cycle was nearing its conclusion. Lower interest rates tend to boost demand for zero-yield bullion.

On Monday, Chicago Fed President Austan Goolsbee stated that the Fed is effectively balancing the task of curbing inflation without triggering a recession. He added that the bank would closely monitor statistics as September approaches to determine if further monetary tightening is required.

This week, the July jobs data in the United States, along with ISM surveys on manufacturing and services, will be closely analyzed to assess the impact of increased borrowing costs on the economy.

The dollar gained ground after a Federal Reserve poll revealed that U.S. banks reported tighter credit standards and weaker loan demand from both businesses and individuals during the second quarter. This indicated that the central bank’s rate-hike campaign was successfully slowing the nation’s financial gears.

On Monday, Chinese authorities issued fresh policy directions but didn’t introduce any concrete measures to stimulate the country’s ailing economy and domestic demand. This left investors disappointed as dreary activity statistics continued to put pressure on officials to take further action.

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