Gold prices saw a slight decline in Asian trade on Tuesday but held close to recent peaks as traders awaited crucial US inflation data, ahead of expected interest rate cuts from Federal Reserve policymakers next week.
The precious metal had previously benefited from safe-haven buying amid a significant market downturn last week, driven by concerns over slowing economic growth.
Gold prices came very close to setting a record high on Friday but retreated slightly as the dollar gained strength in anticipation of this week’s inflation report.
By 3:05 pm AEST (5:05 am GMT), spot gold fell by 0.1% to $2,502.07 an ounce, while December gold futures also dropped 0.1% to $2,531.00 an ounce.
The spotlight this week is on the consumer price index (CPI) inflation data, scheduled for release on Wednesday, which will provide insights into the US economy and potential Federal Reserve actions.
A sign of cooling inflation could boost expectations for lower interest rates in the coming months, a development that typically supports gold prices.
The upcoming CPI reading is critical as it precedes the Federal Reserve’s meeting next week, where the central bank is widely anticipated to cut interest rates by 25 basis points.
This expected rate cut has been a key driver of gold's recent gains, as lower interest rates generally reduce the opportunity cost of holding non-yielding assets like gold.
Other precious metals experienced declines on Tuesday, trailing behind gold in recent weeks. Platinum futures fell 0.1% to $945.00 an ounce, while silver futures dropped 0.2% to $28.59 an ounce.
Among industrial metals, copper prices edged lower on Tuesday, finding little support from data that indicated some economic resilience in China, the top copper importer.
China’s trade balance unexpectedly improved in August due to robust export performance. However, weaker-than-expected import growth raised concerns about sluggish domestic demand.
China’s copper imports decreased by 12.3% year-on-year in August, although they remained positive for the first eight months of the year. This decline followed a series of weak economic readings from China, heightening worries about slowing growth in the world’s largest copper consumer.