Gold slips as US dollar strengthens, investors await Fed officials comments; silver trades flat

Gold prices declined on Tuesday as the U.S. dollar strengthened, with investors anticipating additional remarks from Federal Reserve officials to gain insight into the potential timing of interest rate adjustments. 

Spot gold decreased by 0.5% to $2,312.29 per ounce by 1218 GMT, while U.S. gold futures also fell by 0.5% to $2,320.60 per ounce. The dollar index rose by 0.2% against its counterparts, diminishing the appeal of gold for holders of other currencies.

Also read: Gold and silver prices today on 07-05-2024: Check latest rates in your city

On Monday, spot gold prices gained almost 1% on Monday amid softer dollar and decline in US treasury yields. Friday’s weaker than expected US jobs report fueled expectation of potential rate cuts later this year. Further, safe haven buying due to the ongoing tension in the Middle East also supported the bullions to trade higher. 

The precious metal surged to an all-time peak of $2,431.29 on April 23, 2024, driven by robust acquisitions by central banks and heightened demand from Chinese retail investors, amid escalating geopolitical tensions.

What's weighing on gold prices?

Data from China's central bank revealed that it added 60,000 troy ounces of gold to its reserves in April, marking the 18th consecutive month of purchases despite elevated prices.

Investors are eagerly awaiting remarks from Federal Reserve officials scheduled to speak this week, including Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, later in the day.

Thomas Barkin, President of the Federal Reserve Bank of Richmond, commented on Monday that the current level of interest rates should sufficiently moderate economic activity to bring inflation back to the central bank's 2% target.

According to the FedWatch Tool by CME, traders in Fed funds futures markets are pricing in approximately a 66% likelihood that the U.S. central bank will commence rate cuts in September.

Back home, gold prices rose by ₹200 to reach ₹72,450 per 10 grams in the national capital on Tuesday, continuing their upward trajectory for the second consecutive session. This increase aligns with the strong performance observed in the global markets, as reported by HDFC Securities.

Also read: China's gold consumption rose 6% in first quarter this year; what is driving the rally?

“Gold prices remained below 71150rs after a recent rally towards 71500. Minor weakness persists, potentially extending towards 70750. With no significant data this week, gold prices may trade within a volatile range of 70000-71750,” said Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities.

On the other hand, spot silver declined by 0.8% to reach $27.23 per ounce. Conversely, platinum saw a 0.7% increase, reaching $961.20, while palladium rose by 0.2% to $979.0.