Gold prices advanced during Asian trade on Tuesday, extending their recovery from monthly lows as investors turned their attention to an upcoming speech by United States Federal Reserve Chair Jerome Powell for signals on future rate policy.
By 3:40 pm AEST (5:40 am GMT), spot gold had risen US$26.57, or 0.8%, to US$3,329.93 per ounce.
The gains came despite a modest uptick in the U.S. dollar from multi-year lows ahead of Powell’s appearance at the European Central Bank (ECB) Forum on central banking in Sintra, Portugal.
Powell is scheduled to join a panel of global central bank chiefs, with markets watching closely for any hints on the Fed’s policy outlook.
The CME Group FedWatch Tool currently assigns a 21.2% probability to a rate cut in July, while the odds of a cut in September stand at 75%. A dovish tone from Powell - particularly if he signals subdued inflation expectations - could strengthen market bets on near-term easing, further pressuring the U.S. dollar and providing additional support for non-yielding gold.
Conversely, if Powell surprises with a more hawkish or cautious stance, it could reinforce recent weakness in gold prices and support a stronger greenback.
In addition to Powell’s remarks, traders are eyeing key U.S. economic data due later in the session, including the job openings and labour turnover survey (JOLTS), as well as developments in U.S. trade negotiations ahead of the 9 July tariff deadline.
The U.S. dollar suffered a sharp decline on Monday, with the U.S. dollar index extending to more than three-year lows against a basket of major currencies.
The sell-off was fuelled by mounting fiscal concerns amid a push by the U.S. Senate to pass President Donald Trump’s expansive spending bill.
ANZ analysts commented: “The approval of the tax bill may eventually cool demand for gold as concerns about U.S. growth subside.”
Meanwhile, investor sentiment remained cautious around ongoing trade talks with Japan and the European Union. Treasury Secretary Scott Bessent reiterated that nations could still face significantly higher tariffs, despite what he called “good-faith negotiations”.
