Gold Price Rises: Will the Surge Continue or Fizzle Out?

Gold prices increased on Tuesday as the US dollar weakened and Treasury yields fell. Investors are closely monitoring inflation data to evaluate the direction of the Federal Reserve's policies, particularly amidst ongoing trade tensions and concerns about a potential economic slowdown.

As of 0501 GMT, spot gold had risen by 0.3 percent to $2,898.27 per ounce, while US gold futures saw a slight gain of 0.1 percent, reaching $2,902.50.

The dollar index remains near a four-month low reached last week, which makes gold more affordable for international buyers. Additionally, benchmark 10-year US Treasury yields have decreased, contributing to gold's appeal.

Understanding the Rising Prices of Gold

According to Ilya Spivak, head of global macro at Tastylive, the decrease in the dollar value and Treasury yields is providing some support for gold prices. "The overall uptrend remains intact and the path of least resistance favors the upside," he commented.

Spivak noted that for about a month, gold prices have remained stable within a range of approximately $2,830 to $2,960. A decisive move above or below these levels will be necessary to determine if a longer-term trend is forming.

Meanwhile, in a recent Fox News interview, US President Donald Trump did not speculate on whether his tariffs would result in a recession in the US, which negatively impacted global stock markets. Recently, Trump imposed 25 percent tariffs on imports from Mexico and Canada, along with additional tariffs on Chinese goods. However, he later exempted many Mexican and Canadian imports from these tariffs temporarily, which has created further uncertainty in the markets and raised concerns about US inflation and economic growth.

With the US Consumer Price Index (CPI) data set to be released on Wednesday, investors are eager to analyze how this will influence the Federal Reserve's interest rate decisions.

Gold is often viewed as a protective asset against economic and political risks, as well as inflation. However, if rising inflation leads the Fed to maintain higher interest rates, gold's appeal as a non-yielding asset may diminish.

gold, price, inflation