Gold prices were flat on Tuesday as investors awaited comments from Federal Reserve Chairman Jerome Powell and jobs data for further insights into the U.S. central bank’s interest rate outlook.
Spot gold was flat at $2,331.41 per ounce, as of 0238 GMT. U.S. gold futures were up 0.1% at $2,341.80.
For prices to break out of the current range, the market needs to see further weak data that raises the possibility of a Fed rate cut in September, said Kelvin Wong, senior market analyst for Asia Pacific at OANDA.
Traders will be looking for rate cut cues when Powell speaks later in the day. Next on their radar are ADP employment data, ISM services PMI and the minutes of the latest Fed policy meeting, due on Wednesday, and the nonfarm payrolls report, due on Friday.
Data on Monday showed that U.S. manufacturing contracted for a third straight month in June, while a fall in a measure of the prices factories pay for inputs to a six-month low suggested inflation could continue to ease.
While bullion is considered a hedge against inflation, higher rates increase the opportunity cost of holding the unprofitable asset.
Citi analysts expect investment demand for gold to rise to absorb almost all mine supply over the next 12 to 18 months, but added that the main downside risk to its bullish baseline forecast is lower-than-expected retail demand from China due to import quotas.
“Weaker demand from central banks or a delay in the Fed’s interest rate normalization are other risks to the strong investment demand thesis,” they said in a note.
Spot silver fell 0.2% to $29.38 an ounce, platinum was nearly unchanged at $977.00 and palladium rose 1.2% to $983.09.
