Gold prices slip amid profit-taking

Gold prices retreated on Tuesday as investors locked in profits after a recent rally that pushed bullion to a one-week high.

Market participants are keenly awaiting the release of key US inflation data, which will provide crucial insights into the Federal Reserve’s monetary policy trajectory.

Spot gold declined 0.4 per cent to $2,461.71 per ounce, having touched its highest level since August 2 earlier in the session. Prices had surged more than one per cent in the previous trading day. US gold futures also dipped 0.1 per cent to $2,502.00.

“Gold had a solid start to the week though it eased moderately on some gentle profit-taking,” said Tim Waterer, chief market analyst, KCM Trade.

Traders are eagerly anticipating the release of July’s US producer price index later in the day and the consumer price index (CPI) on Wednesday. The CPI is expected to show a 0.2 per cent month-on-month increase in both headline and core prices.

Market sentiment suggests a 50 per cent chance of a 50-basis point rate cut in September, according to the CME FedWatch Tool. A lower interest rate environment tends to benefit gold as it is considered a hedge against inflation.

“If markets become more optimistic of a 50 bp cut coming to fruition, this could propel the gold price to make a run at the $2,500 level,” Waterer said.

Meanwhile, geopolitical tensions in the Middle East continue to simmer, with Israeli Prime Minister Benjamin Netanyahu and his defense minister engaged in public disagreements.

Among other precious metals, silver fell 1.3 per cent to $27.64 per ounce, platinum edged 0.2 per cent lower to $934.95, and palladium shed 0.7 per cent to $913.25.

Attribution: Reuters

Subediting: M. S. Salama