Written by The Banking Post
Gold prices edged lower on Tuesday as investors turned cautious ahead of crucial US employment and inflation data that could shape the Federal Reserve’s policy path in the months ahead.
Spot gold slipped 0.3 per cent to $4,290.33 an ounce by early trading, while US gold futures fell 0.4 per cent to $4,316.40. Despite the pullback, bullion remains up an impressive 64 per cent so far this year, after repeatedly setting new records.
Market participants appear hesitant as gold trades close to a key technical level. Analysts noted that prices are hovering near the previous peak of around $4,380 touched in mid-October, raising questions about whether the rally has enough momentum to push higher or is due for a pause.
Attention is now firmly on upcoming US macroeconomic data. Traders are currently pricing in a 76 per cent chance of a 25-basis-point rate cut by the Fed in January, with some expecting further easing later in the year, according to futures market indicators.
This week’s combined US employment reports for October and November, due on Tuesday, are expected to be incomplete following a 43-day government shutdown that disrupted data collection. Several key details, including the October unemployment rate, will be missing.
Markets are also awaiting weekly jobless claims and the Personal Consumption Expenditures index, the Fed’s preferred inflation gauge, due later in the week. Fed officials have signalled that current inflation readings may not fully reflect underlying demand and supply conditions, suggesting price pressures are closer to the central bank’s 2 per cent target than headline numbers imply.
Gold, which does not yield interest, typically benefits from lower interest rate expectations, keeping the broader outlook supportive despite the short-term dip.
In the wider precious metals market, spot silver fell 1.4 per cent to $63.03 an ounce, retreating from a record high of $64.65 reached last Friday. Analysts said silver’s longer-term outlook remains positive, supported by strong industrial demand, robust investment interest and tightening global inventories after a sharp rally this year.
