By Brijesh Patel
(Reuters) – Gold prices rose on Tuesday, helped by a weaker dollar, as investors look to U.S. inflation data due later this week for more clarity on the timing of interest rate cuts.
rose 0.3% to $2,357.44 an ounce at 1:55 PM ET (1755 GMT). The US settled 0.9% higher at $2,356.5.
“Interest rates have come down and we’re seeing yield curve rates drop a little bit. Gold is coming out of a correction and hovering around resistance levels and now bouncing back,” said Bart Melek, head of commodity strategies at TD Securities.
“We remain fairly bullish on gold. I still think the ambiguity of the Federal Reserve’s monetary policy may prevent gold from taking off and future developments will be highly data-dependent.”
The dollar fell to its lowest in more than a week, making gold cheaper for other currency holders. [USD/]
The focus this week will be on the US personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge, which will be released on Friday.
The Fed meeting minutes released last week showed that the policy response for now would be to maintain the benchmark interest rate at current levels.
Traders estimate about a 63% chance of a Fed rate cut in November. Lower interest rates reduce the opportunity cost of holding unprofitable gold.
“Gold prices are likely to remain reasonably supported by buying demand during dips and central bank diversification,” said Amelia Xiao Fu, head of commodity market strategy at Bank of China International.
Global central banks’ demand for gold has been high for two years as they diversify their foreign exchange reserves.
Meanwhile, global physically backed gold exchange-traded funds (ETFs) saw net outflows of 11.3 tonnes last week, according to the World Gold Council.
Silver rose 0.9% to $31.95 after jumping 4.4% on Monday. Platinum rose 0.3% to $1,057.10. Palladium fell 1.1% to $978.00.
