Gold inches higher as traders await US data

Bengaluru — Gold prices edged higher on Tuesday as the dollar remained subdued, while investors strapped in for US economic data this week for clarity on the timeline for Federal Reserve’s interest rate cut.

Spot gold was up 0.2% at $2,401.22/oz by 2.04am GMT. US gold futures added 0.4% to $2,403.60.

The dollar was tepid, making greenback-priced bullion cheaper for other currency holders.

Traders will eye the report on second-quarter GDP on Thursday and personal consumption expenditures (PCE) data for June on Friday.

“Gold looks quite comfortable around $2,400 for now, so there is the chance of a minor bounce heading into GDP,” City Index senior analyst Matt Simpson said.

But “should growth surprise to the upside, I still think gold can hold above $2,360 in the current environment.”

Gold prices scaled a record high of $2,483.60 last week, with markets broadly pricing in a 25 basis point US rate cut by September. Lower rates reduce the opportunity cost of holding bullion.

On the political front, US vice-president Kamala Harris is building Democratic backing for her sudden presidential run after President Joe Biden dropped out of the race.

While accepting the Republican nomination, Donald Trump pledged to cut corporate taxes and interest rates. Lower tax revenues could widen the US federal government’s budget deficit. Many investors believe the deficit will keep deteriorating under a second Democratic administration too.

“While there is a lack of a clear pre-election commodities trade given the range of scenarios that could play out, gold stands out as a winner,” JPMorgan said in a note.

“Structurally bullish drivers for gold, like growing concerns on complacency over the rise in fiscal debt, tariffs, and trade retaliations as well as broad America First rhetoric, are likely to remain intact.”

Spot silver fell 0.2% to $29.14, platinum firmed 0.4% to $951.13 and palladium gained 0.1% to $908.43.

Reuters