Gold prices rose on Tuesday, supported by uncertainty surrounding the incoming Trump administration’s policies and investor positioning ahead of crucial U.S. data that will offer guidance on the Federal Reserve’s policy trajectory.
Spot gold rose 0.3% to $2,669.53 an ounce by 0227 GMT. U.S. gold futures gained 0.3% to $2,685.50.
Bullion fell about 1% on Monday as a strong U.S. dollar, boosted by robust jobs data last week, reduced investor appetite for the precious metal. [GOL/]
The strong jobs report also reinforced the Fed’s cautious stance on rate cuts this year, while concerns grew that tariffs imposed by President-elect Donald Trump could fuel inflation .
“The reason gold is doing better during the current period of U.S. dollar strength than in the past can be attributed to investors’ inflationary concerns…gold has assumed its role as an inflation hedge,” said Tim Waterer, chief market analyst at KCM Trade.
U.S. consumers’ outlook on expected inflation developments was mixed last month, according to a survey by the New York Federal Reserve.
Bullion is used as a hedge against inflation, although rising interest rates reduce the attractiveness of this non-yielding asset.
Investors now await the U.S. Consumer Price Index (CPI) on Wednesday and the Producer Price Index (PPI) later in the day for further information on the economy and policy trajectory of the Fed by 2025. Several Fed officials are also due to speak this week.
“If inflation numbers are worse this week, the US dollar will likely come under selling pressure, which could boost gold as it becomes cheaper to buy,” Mr Waterer said.
COMEX gold speculators increased their net long positions by 12,116 contracts to 194,499 during the week of Jan. 7, data showed. [CFTC/]
Spot silver was steady at $29.59 an ounce. Palladium rose 0.5% to $958.10 and platinum added 0.2% to $940.75.
