Gold rebounded on Tuesday after dropping to a two-week low, as investors shifted their attention to upcoming U.S. inflation data and Federal Reserve Chair Kevin Warsh’s congressional testimony for clues on monetary policy. Spot gold climbed 0.5% to $4,019.50 per ounce by 0821 GMT, recovering from its lowest level since July 1 reached earlier in the session. Similarly, U.S. gold futures for August delivery rose 0.5% to $4,026.20. ActivTrades analyst Ricardo Evangelista noted that the uptick was driven by a temporary halt in the U.S. dollar’s recent rally. The U.S. dollar index fell 0.2%, reducing the cost of dollar-denominated bullion for buyers using other currencies.
Market participants are waiting for the June U.S. Consumer Price Index (CPI) figures and Chairman Warsh’s inaugural semi-annual testimony to Congress, both scheduled for release later today. Evangelista warned that a CPI reading exceeding 3.8% could validate expectations of a hawkish Federal Reserve, creating downward pressure on gold prices. High oil prices have already exacerbated inflation anxieties, bolstering the argument for the central bank to maintain elevated interest rates, which lowers the attractiveness of non-yielding gold.
In the previous session, spot gold suffered a nearly 3% decline—its sharpest single-day percentage drop in over a month—as escalating conflict between the U.S. and Iran pushed energy costs upward. Crude prices hit a four-week high following the U.S. reimposition of a naval blockade on Iran and attacks in the Strait of Hormuz, triggering concerns over global energy supply lines. On Monday, Fed Governor Christopher Waller stated that the central bank might have to implement a rate hike in the near term if incoming economic data indicates that inflation remains significantly higher than the 2% target. Market pricing currently reflects an approximate 75% probability of a rate increase in September, according to data from the CME FedWatch Tool. In other precious metals, spot silver gained 0.6% to reach $58.00 per ounce, while palladium increased 1.5% to $1,265.79.
Click here for more on Finance and Investing
