Gold prices creep higher; strong dollar, inflation jitters weigh

Gold prices saw a slight uptick in Asian trading on Monday but remained within a narrow range due to pressure from a stronger dollar and anticipation of key U.S. inflation data later this week.

The precious metal has mostly hovered around the low $2,300 an ounce mark for about two weeks, with traders hesitant to make significant moves due to uncertainty over U.S. interest rates.

Spot gold increased by 0.2% to $2,325.52 an ounce, while gold futures for August delivery rose 0.3% to $2,337.85 an ounce by 00:04 ET (04:04 GMT).

Gold Pressured by Strong Dollar, Awaiting PCE Data

Gold prices have been primarily pressured by the strength of the dollar, which is hovering near its highest levels since early May. This dollar strength follows the recent strong purchasing managers index data, which reduced expectations for Federal Reserve interest rate cuts.

The robust U.S. economic data raised concerns that the Fed might have more leeway to maintain higher interest rates for a longer period.

Traders are now focused on the upcoming Personal Consumption Expenditures (PCE) price index data due on Friday. As the Fed’s preferred inflation gauge, the PCE data is likely to influence expectations for future interest rate adjustments.

While the PCE data is expected to show some cooling in inflation, it is still anticipated to remain well above the Fed’s 2% annual target. Prolonged high-interest rates generally have a negative impact on precious metals since they increase the opportunity cost of holding non-yielding assets.

Other Precious Metals

Other precious metals saw declines on Monday after staying largely range-bound in recent weeks. Platinum futures fell 0.3% to $1,005.10 an ounce, and silver futures decreased by 0.2% to $29.895 an ounce.

Copper Prices

The strength of the dollar also put pressure on industrial metal prices, including copper, which faced additional strain from concerns about a potential trade war between China and the European Union.

Benchmark copper futures on the London Metal Exchange fell 0.1% to $9,677.50 a tonne, while one-month copper futures steadied at $4.4205 a pound.

Sentiment towards China, the world’s largest copper importer, was negatively affected after the EU imposed tariffs on Chinese electric vehicle imports. The move provoked a strong response from Beijing, with Chinese officials hinting at retaliatory tariffs and the possibility of a trade war between the two major economies.