Gold prices climbed to a nearly three-week high on Tuesday as the dollar slipped to a two-month low, with investors awaiting US inflation data that could impact the Federal Reserve's rate hike
trajectory.
Spot gold rose by 0.6% to $1,935.99 per ounce, while US gold futures gained 0.6% to $1,941.60.
UBS analyst Giovanni Staunovo stated that the response to US inflation data would depend on the rate at which inflation is slowing down. If inflation surprises on the downside, gold could benefit as it may indicate an earlier end to the Fed's hiking cycle.
Gold, considered a safe-haven asset during times of economic or financial uncertainty, tends to perform well when rates are low and during periods of uncertainty.
The weaker dollar has been supporting bullion, as the Fed suggests it is nearing the end of its tightening cycle. However, gold investors appear cautious ahead of Wednesday's US inflation report.
The dollar index reached its lowest level since May 11, making gold more affordable for holders of other currencies.
Additionally, ongoing central bank gold purchases are likely supporting the yellow metal, according to UBS's Staunovo.
In other precious metals, spot silver rose 0.4% to $23.1961 per ounce, platinum gained 0.4% to $930.40, while palladium fell 0.1% to $1,239.06. Photo by Rob Lavinsky, iRocks.com – CC-BY-SA-3.0, Wikimedia commons.