Gold prices are stable as the US currency remains strong

8 Aug 2023 , 10:41 AM

In early Asian trading on Tuesday, gold prices remained unchanged as the dollar recovered some ground. Investors were waiting for the U.S. inflation data due this week to determine whether further rate hikes were likely.

Spot gold was unchanged at $1,935.39 per ounce, and U.S. gold futures were likewise unchanged at $1,970.

The dollar’s strength against other major currencies increased by 0.2%, increasing the cost of bullion for holders of other currencies. 

As officials presented the arguments in favour of and against another interest rate increase on Monday, the contours of the dispute at the centre of the Federal Reserve’s policy decision next month were more apparent.

According to Fed Governor Michelle Bowman, additional interest rate increases will probably be required to bring down inflation to the U.S. Federal Reserve’s 2% target.

The potential cost of owning zero-yield bullion increases when rates are raised since bond yields rise in general.

Investors are anticipating Thursday’s consumer price index data for clues about the direction of the Fed’s monetary policy.

On Monday, a key market indicator of long-term inflation expectations for the euro area reached its highest level in more than ten years, as investors anticipate that future consumer price hikes will be much higher than their pre-COVID averages.

According to a source familiar with the situation who spoke to Reuters, Turkey’s Treasury intends to set a cap on the imports of unprocessed gold to lessen the impact of such imports on the current account balance.

The largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, reported that its holdings decreased 0.3% on Monday. 

Platinum prices slipped 0.3% to $917.06 and spot silver prices fell 0.2% to $23.09. At $1,241.02, palladium was up 0.1 percent.

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