
Gold prices remained near a three-month peak on Tuesday, buoyed by weaker-than-expected US economic data and anticipation of comments from Federal Reserve Chair Jerome Powell. Spot gold held steady at $2,114.59 per ounce, hovering close to Monday’s high of $2,119.69, its strongest level since December 4th. However, US gold futures saw a slight dip of 0.2% to $2,121.60.
This recent rally in gold is attributed to softer US manufacturing data and a decrease in real interest rates. However, UBS strategist Joni Teves highlights a “positive underlying investor sentiment towards gold” that could propel prices even higher.
Investors are keenly awaiting Jerome Powell’s congressional testimony scheduled for Wednesday and Thursday this week. This, coupled with a data-heavy week including key jobs figures, will provide crucial insights into the health of the US economy and the Fed’s potential rate cut timeline. Lower interest rates typically make gold, a non-interest-bearing asset, more attractive to investors.
Despite the recent price increase, holdings in the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, have fallen 10% compared to last year. However, UBS’ Teves suggests this selling is a measured portfolio adjustment rather than a sign of diminishing investor confidence in gold.
Meanwhile, other precious metals saw a decline on Tuesday. Spot platinum dipped 0.7% to $890.95 per ounce, while palladium fell over 1% to $950.13. Analysts at ANZ predict a potential rebound for platinum due to its ongoing substitution for palladium in the auto industry, along with strong auto sales figures.