Gold prices slip amid stronger dollar, Fed comments

Gold prices edged lower on Tuesday, pressured by a strengthening US dollar and tempered by comments from US Federal Reserve officials who renewed expectations of interest rate cuts later this year.

Spot gold was down 0.2 per cent at $2,403.22 per ounce, having reached its lowest point since July 26 in the previous session amid a broader market sell-off driven by recession fears.

The US dollar gained about 0.3 per cent against its rivals, and the benchmark 10-year Treasury yields also rose, exerting downward pressure on the bullion.

ANZ commodity strategist Soni Kumari noted that if upcoming US economic data weakens significantly and the Fed adopts an even more dovish stance, gold could move towards $2,500 or beyond.

Traders are also keeping a close eye on data from top consumer China and geopolitical tensions, which could continue to support safe-haven demand.

Federal Reserve policymakers pushed back against the notion that weaker-than-expected July jobs data signalled a recessionary freefall but acknowledged the need for rate cuts to prevent such an outcome.

Market expectations now point to 110 basis points of easing this year, with a 50-basis point cut in September seen as highly possible. Lower interest rates typically weaken the dollar and bond yields, boosting the appeal of non-interest-bearing gold.

Meanwhile, Asian share markets experienced a rebound, with Japanese stocks leading the way.

Data released on Monday showed a rebound in the US services sector activity from a four-year low in July, supported by increased orders and employment.

In other precious metals, silver fell 1.5 per cent to $26.87 per ounce, platinum gained 1.2 per cent to $917.40, and palladium declined 0.32 per cent to $846.98.

Attribution: Reuters