Gold steady as markets assess Middle East tensions ahead of US inflation data
Markets are also watching Trump’s two-day visit to China this week
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[BENGALURU] Gold prices were steady on Tuesday (May 12), as markets weighed the developments in the Middle East conflict and interest rate expectations ahead of key US inflation data.
Spot gold was steady at US$4,732.89 per ounce by 10.46 am in Singapore. US gold futures for June delivery gained 0.3 per cent to US$4,742.40. US President Donald Trump said on Monday that a ceasefire with Iran was “on life support” after Teheran’s response to a US proposal to end the war made clear the two sides were still far apart on several issues.
“We have already seen expectations for a lot of central banks shift in a much more hawkish direction, and for the Federal Reserve, it’s meant a dropping of all rate cut possibilities for this year,” said Ilya Spivak, head of global macro at Tastylive.
“We are really looking to what the CPI (Consumer Price Index) numbers might give, and if there is a stronger inflationary impetus there than already expected.”
The data is expected later in the day and could give investors clues into the Fed’s future monetary policy path.
Meanwhile, oil prices rose in early Asian trade, while the US dollar extended gains from the previous session.
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Elevated crude oil prices can stoke inflation, increasing the likelihood of higher interest rates.
While gold is seen as a hedge against inflation, high rates tend to weigh on the non-yielding asset. BofA Global Research and Goldman Sachs scaled back expectations of US interest rate cuts this year, citing elevated inflation due to high energy prices and growing strength in the labour market.
Markets are also watching Trump’s two-day visit to China this week, where he is set to meet Chinese President Xi Jinping to discuss a wide variety of topics, including the Middle East.
Spot silver was unchanged at US$86.08 per ounce, platinum slid 1.6 per cent to US$2,098.25, and palladium was down 1 per cent at US$1,494. REUTERS
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