Gold loses shine as focus shifts to US inflation data
Gold prices tumbled on Monday as hopes for a de-escalation in the Middle East reduced its safe-haven appeal, Reuters reported.
Investors are now turning their attention to key US inflation data later this week, which could influence the Federal Reserve’s interest rate decisions.
Spot gold dropped 0.9 per cent to $2,369.97 per ounce by mid-morning GMT, retreating from recent highs that neared the all-time record set earlier this month. US gold futures mirrored the decline, falling 1.2 per cent.
This decrease follows a weekend where tensions between Israel and Iran appeared to cool. Tehran downplayed Israel’s retaliatory drone strike, suggesting a potential move to avoid further escalation.
The upcoming release of the US Personal Consumption Expenditures Price Index (PCE), the Fed’s preferred inflation gauge, is now at the forefront of investor concerns.
Higher inflation readings could signal continued hawkishness from the Federal Reserve, potentially leading to higher interest rates.
Rising interest rates make holding non-yielding assets like gold less attractive, as investors can earn a return on interest-bearing instruments. The benchmark 10-year US Treasury yield edged up on Monday, reflecting this dynamic.
It is noteworthy that the decline was not limited to gold. Spot silver fell also 2.3 per cent, while palladium shed 0.3 per cent. Platinum, however, managed a slight gain of 0.3 per cent.
