Gold prices saw a slight decline on Tuesday as investors decided to take profits following a spike to new highs the day before. This increase was largely driven by expectations of further interest rate cuts from the US Federal Reserve and the ongoing appeal of gold as a safe-haven asset.
As of 0248 GMT, spot gold was down 0.3%, trading at $4,340.29 an ounce, after reaching a peak of $4,381.21 on Monday. Meanwhile, gold futures for December delivery were also lower at $4,356.40 an ounce.
Tim Waterer, the chief market analyst at KCM Trade, mentioned, “The drop in gold prices today can be attributed to a mix of profit-taking and a decrease in safe-haven investment. If the Fed continues its current rate-cutting pace, any dip in gold prices will likely be viewed as a chance to buy.”
The CME FedWatch tool indicates that the market is anticipating a quarter-point interest rate cut from the Fed this month, followed by another in December. Typically, gold performs well in environments of low interest rates since it doesn’t yield income.
“There’s still potential for gold to climb further, unless the upcoming U.S. Consumer Price Index (CPI) data, which was delayed due to the government shutdown, delivers an unexpected rise,” Waterer added.
According to a Reuters poll, this CPI data, set to release on Friday, is expected to show a 3.1% increase in September compared to the previous year.
The government shutdown reached its 20th day on Monday, with senators failing again to resolve the stalemate. White House economic advisor Kevin Hassett noted that the shutdown may come to an end this week.
This shutdown has postponed the release of vital economic information, leaving both investors and policymakers without crucial data ahead of next week’s Federal Reserve meeting.
On the trade side of things, US Treasury Secretary Scott Bessent is likely to meet with Chinese Vice Premier He Lifeng in Malaysia this week in hopes of avoiding increased tariffs on China.
In other market movements, spot silver prices dipped, platinum decreased by 1.6% to $51.64 an ounce, while palladium rose 0.5% to $1,503.17.
