Gold Makes Modest Gains from Recent Losses, Investors Await US Economic Data

The price of gold recovered modestly on Tuesday to claw out of the near two-month low it had sunk to during the previous trading sessions. Investors are currently studying the Middle East situation while also watching out for a number of economic data releases that are due in the U.S. starting Tuesday afternoon.

In early trading, spot gold was priced at $4,143.8 an ounce, a gain of 0.7% from Monday’s closing price. Gold futures in the U.S. were priced at $4,175.1 an ounce, a gain of 0.2%.

Exness’ market strategist Christopher Tahir says the market for precious metals will be largely influenced by geopolitical developments, especially the U.S.-Iran conflict. He says the continuation of tensions has the potential to keep Treasury yields and energy prices elevated, stoking inflation in the global economy.

On the other hand, when these tensions ease, the pressure on precious metals could abate and allow the metals to record gains, Tahir added.

Officials in the U.S. and Iran revealed that the two parties had been having discussions with intermediaries separately in an attempt to find a solution to the ongoing conflict. Several attempts have previously been made to broker some form of agreement, but each deal announced fell apart and hostilities resumed. Markets are hoping that these current efforts will yield a meaningful outcome.

Oil prices trended upwards again on Tuesday after ticking up on Monday, and this has created concerns that oil-fueled inflation could cause central banks around the world to further tighten their monetary policies by hiking interest rates.

When lending rates and yields are high, gold struggles because investors move their money into assets that give them a return. Currently, markets put the chances of an October rate hike in the U.S. at 70.3%, up from 57.6% one week ago.

Lisa Cook, a Federal Reserve Governor, said she anticipated inflationary pressures from elevated oil prices and AI-linked demand to continue over the next few months. She, however, didn’t indicate whether or not additional rate hikes would be needed. Such comments have been taken by markets as a strong indication of a rate increase at the next sitting of the Fed.

All eyes are going to be on the economic data due to be released in the U.S. this week, starting with job openings data and consumer confidence data on Tuesday, followed by nonfarm payrolls, PCE, and ADP employment data over the next days.

These reports will give a clearer pointer as to what decision the Fed will make when it meets in October, so markets and companies like Platinum Group Metals Ltd. (NYSE American: PLG) (TSX: PTM) will be keeping tabs on these data releases.

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