Gold steadied as traders weighed the prospect of further monetary tightening from the Federal Reserve ahead of a slew of US economic data.
The precious metal has fallen around 7% from this year's peak reached early last month as prospects for higher rates continue to keep a lid on bullion, which doesn't yield any interest. Investors flocked to gold in March and again in May during the aftermath of a series of US bank collapses, which fueled bets that the Fed may have to cut rates sooner than anticipated.
Investors are giving up on that idea after Chair Jerome Powell flagged last week that the benchmark rate could go up by another half percentage point by the end of 2023. Other monetary authorities -- including the European Central Bank -- have also signaled they will likely keep hiking.
That's helping spur outflows from bullion-backed exchange-traded funds, which are weighing on prices. Total holdings in gold-backed ETFs have fallen for four consecutive weeks, and volumes are down about 10% compared to last year, according to initial data compiled by Bloomberg. Sustained ETF buying was a key driver of bullion in 2020, when it hit a record.
Still, the prospect of monetary tightening triggering a US slowdown is preventing a plunge in prices. Later Tuesday are a slew of economic data, including durable goods orders and a gauge of consumer confidence.
Spot gold added 0.1% to $1,925.31 an ounce as of 10:16 a.m. in London. The Bloomberg Dollar Spot Index weakened slightly. Silver, platinum and palladium all rose.
Source : Bloomberg
