Gold reached its highest level in over two months amid anticipation of US inflation figures influencing Fed policies and escalating geopolitical tensions supporting safe-haven demand.
Gold rose on Tuesday to its highest level in more than two months as traders waited for US inflation data that could help shape the Federal Reserve’s next move. Spot gold edged up 0.1% to $4,393.69 an ounce after touching $4,434.84, its strongest level since June 5, while US gold futures gained 0.8% to $4,453.40.
The metal has been supported by growing expectations that the Federal Reserve may have less room to keep tightening. Softer US jobs figures for July helped lift gold by 2.4% in a single session, as weaker labour-market data tempered bets on further rate rises. CME Group’s FedWatch tool showed traders pricing in a 48% chance of a rate increase in September and a 78% chance by December.
That caution reflects the Fed’s broader data-dependent stance. When the Federal Open Market Committee lifted rates by 0.25 percentage points on July 26, 2023, it said future decisions would be made meeting by meeting, depending on incoming economic readings. Beth Hammack, now president and chief executive of the Cleveland Fed, has also argued that rates should rise gradually rather than sharply later if inflation pressure persists.
Geopolitics offered an additional lift. Reuters reported that Donald Trump intensified his rhetoric towards Iran, adding another layer of uncertainty at a time when markets are already focused on inflation and policy risk. The World Gold Council has said periods of economic concern and market volatility tend to support gold demand, even when exchange-traded fund flows are uneven.
Other precious metals were weaker. Silver fell 1.4% to $64.81 an ounce, platinum slipped 0.2% to $1,749.51 and palladium declined 1.3% to $1,364.75.
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