Gold price rises slightly, investors watch Fed forecast and US inflation data

By Rahul Paswan

(Reuters) – Gold prices rose slightly on Tuesday despite an uptrend in the U.S. dollar as investors awaited key U.S. inflation data and the conclusion of the U.S. Federal Reserve's two-day monetary policy meeting on Wednesday.

Spot gold rose about 0.1% to $2,312.70 an ounce by 18:08 GMT. U.S. gold futures closed largely unchanged at $2,326.60.

“People are nervous about tomorrow's Fed meeting because if inflation numbers don't show improvement, the Fed will not signal that it will cut interest rates any time soon. This means that both the dollar and US interest rates will rise, which will have a negative impact on gold,” said Marex analyst Edward Meir.

The dollar index hovered near its one-month high reached earlier in the session, making gold expensive for buyers outside the US. [USD/]

According to a Reuters poll, the Fed is likely to cut interest rates in September and again this year. There is also a significant risk that the central bank will only cut interest rates once or not cut them at all.

Due to high interest rates, gold bars are less attractive compared to high-yield investments.

“The next key level is further down, just above $2,300. If the price of gold falls below that, it is much more likely that the price of gold will continue to fall and retest the $2,200 level,” said Everett Millman, chief market analyst at Gainesville Coins.

Driven by US labor market data and news that China's central bank held off on buying gold for its reserves in May, prices fell more than 3.5 percent on Friday, the biggest daily drop for gold since November 2020.

However, China is likely to resume its gold buying spree once prices fall from the record highs reached in May, industry officials said at a conference this week.

Among other metals, spot silver fell over 2% to $29.16 an ounce, platinum lost 1.5% to $952.67 and palladium lost 2% to $885.75.

(Reporting by Rahul Paswan in Bengaluru; Editing by Christina Fincher, Tasim Zahid and Alan Barona)