A weaker dollar helped gold prices rise in early Asian trade on Tuesday, but investors were waiting for more U.S. economic data this week to determine the Federal Reserve’s next course of action.
Spot gold increased 0.4% to $1,996.99 per ounce. Futures for U.S. gold increased 0.3% to $2,005.50.
The dollar index fell by 0.1%, increasing the appeal of gold to buyers using foreign currencies.
The Dallas Fed’s report on Monday revealed that Texas’ manufacturing sector shrank in April, illustrating the economic cost of the Fed’s cycle of rate increases.
Despite being viewed as a protection against inflation and economic uncertainty, gold’s appeal is diminished by rising interest rates.
According to the CME FedWatch tool, the probability that the Fed will raise interest rates by 25 basis points at its meeting on May 2-3 is 90.5%.
As investors look for low risk areas to park money, they are more concerned that the U.S. Treasury Department may reach its debt ceiling in the upcoming months. As a result, some Treasury notes are being avoided while others are being bought up by investors.
The largest gold-backed exchange-traded fund in the world, SPDR Gold Trust GLD, reported that its holdings increased by 0.41% to 927.43 tonnes on Monday from 923.68 tonnes on Friday.
Spot silver increased by 0.2% to $25.22 for an ounce, while platinum increased by 0.5% to $1,087.70. Palladium increased by 0.1% to $1,536.56.
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