The yellow metal rose slightly during the Asian period trading Tuesday after suffering a sharp drop away from its record levels reached during last week's trading, with markets awaiting key U.S. inflation data today as well as the Federal Reserve's rate decision tomorrow.
Gold last week climbed to its highest levels in history at $2,146 an ounce, as markets were betting that the Fed would cut rates by March 2024. Those bets have pushed gold for the rally, but gold has fallen sharply from record highs over the past week, and gold has also lost $2,000 an ounce this week, as positive U.S. data was released last Friday that led markets to bet the Fed would have more room to keep interest rates higher for longer.
Markets are now directly focused on inflation data for the U.S. Consumer Price Index set for Tuesday, which, despite its recent period of decline, now remains well above the Fed's annual target of 2%.
Following inflation data, the Fed is set to make a decision on interest rates for the last time this year on Wednesday, The Fed is widely expected to keep rates unchanged And so far the Fed has largely maintained its rhetoric that interest rates will stay higher for longer, But recent signs of some slowdown in the U.S. economy have spurred some bets on the possibility of an early rate cut next year.
Gold has largely traded on U.S. monetary policy signals in recent months, since higher interest rates increase the opportunity cost of investing in the yellow metal, as that idea has led gold to stay off record highs for much of the year.
