Gold prices moved slightly higher on Tuesday as investors focused on two major issues: possible U.S.-Iran talks and upcoming U.S. jobs reports that could give clues about the Federal Reserve’s next interest rate move.
Spot gold increased 0.2% to $4,062.41 per ounce, while U.S. gold futures gained 0.7% to $4,117.50.
Investors are waiting for several key U.S. employment reports this week. Job opening data is expected later Tuesday, the ADP private jobs report will come on Wednesday, and the important nonfarm payrolls report will be released on Friday.
Ajay Kedia, director at Kedia Commodities in Mumbai, said gold is currently in a stable phase. He explained that if the U.S. job market shows signs of weakness, the dollar could come under pressure, which may help gold prices rise.
Markets are also watching developments between the U.S. and Iran. U.S. President Donald Trump said discussions with Iran were happening and called it a “last chance” for Tehran to reach an agreement. However, Iran denied that any talks were taking place or planned.
The ongoing tensions have pushed energy prices higher and increased concerns about inflation. Rising inflation can influence central banks to increase interest rates to control prices.
Gold is often considered a protection against inflation, but higher interest rates usually hurt gold because the metal does not provide interest income.
Traders are currently estimating a 65% chance of a U.S. rate hike in September after the Federal Reserve kept rates unchanged at its latest meeting.
Kedia said that if expectations for a September rate increase start to decline, it could provide more support for gold prices.
New York Federal Reserve President John Williams said he believes inflation is slowly moving in the right direction. However, he added that the central bank is ready to raise rates if inflation does not continue to improve.
Meanwhile, Citi expects gold prices may remain weak or move sideways over the next month before gaining strength. The bank sees gold potentially reaching $4,500 in the fourth quarter and $5,000 by the first half of next year.
Other precious metals also moved higher. Silver rose 1.2% to $58.89 per ounce, platinum increased 0.9% to $1,641.96, and palladium gained 0.9% to $1,275.83.
