Gold prices edged lower on Tuesday as the US dollar regained strength, while ongoing worries over the nation’s fiscal outlook and anticipation of key economic data kept investors cautious about future interest rate moves.
As of 0537 GMT, spot gold declined 0.50% to $3,325.99 per ounce. US and London markets were closed on Monday due to a holiday. Meanwhile, US gold futures dropped 1.20% to $3,325.70.
Kelvin Wong, Senior Market Analyst for Asia Pacific at OANDA, noted, “Gold prices are consolidating as the market pauses, awaiting the next catalyst. However, concerns about the growing US budget deficit continue to support gold prices while also contributing to dollar weakness.”
The dollar index bounced back against major currencies after hitting a near one-month low in the previous session. This rebound made dollar-priced gold less appealing to holders of other currencies.
Last week, the US House of Representatives approved a version of President Donald Trump’s tax-cut bill, which the Congressional Budget Office estimates will add approximately $3.8 trillion to the federal debt over the next decade, currently standing at $36.2 trillion.
In trade news, President Trump withdrew his threat to impose 50% tariffs on European Union imports next month. The original July 9 deadline remains in place to allow negotiations between Washington and the 27-nation bloc.
Investor attention this week will focus on speeches from Federal Reserve officials and the US core Personal Consumption Expenditures price index report due Friday, both expected to provide clues on interest rate policy. Futures markets predict the Fed is likely to resume rate cuts in September.
In other metals, spot silver fell 0.70% to $33.12 per ounce, platinum declined 0.60% to $1,078.68, and palladium slipped 0.80% to $979.50.
