Gold prices rose slightly in the Asian session on Monday recovering some losses recorded the previous week.
This modest recovery occurred in a cautious environment among traders attentive to the upcoming essential inflation reading in the United States.
Additionally, holidays in the United Kingdom and the United States moderated trading volumes, contributing to lower market volatility.
The increase in the price of gold was more than 0.55%, bringing it to around $2,345 per ounce. This rise has captured the attention of investors significantly ahead of the imminent release of the PCE price index data, the Federal Reserve’s preferred inflation indicator.
These data, expected on Friday, are crucial for determining future monetary policies, as recent warnings from the Fed about inflation have diminished expectations for interest rate cuts.
The Federal Reserve’s stance has significantly influenced gold prices. The possibility that interest rates will remain unchanged in September has led many traders to opt for the dollar and Treasury bonds instead of gold. This preference for safer assets in times of economic uncertainty has reduced the demand for gold as a haven.
The gold market, traditionally seen as a hedge against inflation and economic uncertainty, has experienced a decline in its appeal due to signs of stability in U.S. monetary policy. The pressure on gold prices reflects the relative confidence in the U.S. economy and the strength of its currency and Treasury bonds.
In conclusion, the recent increase in gold prices reflects a mix of recovery from previous losses and caution ahead of upcoming inflation data in the United States. The expectation that the Federal Reserve will keep interest rates unchanged has led investors to prefer the dollar and Treasury bonds, decreasing the demand for gold as a haven. This scenario underscores the sensitivity of the gold market to monetary and economic policies, and its evolution will largely depend on the economic data to be presented in the coming days.
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