Gold futures were little changed heading into two crucial inflation reports later this week. Financial markets paid close attention to language expressed during Federal Reserve Chair Jerome Powell’s visit to Capitol Hill to determine any hint as to when officials could cut interest rates.
August gold futures rose $1.80, or 0.08%, to $2,365.40 per ounce at 16:04 GMT on Tuesday on the COMEX division of the New York Mercantile Exchange. Gold rose around 1% last week and is up more than 14% year-to-date.
Silver, the sister commodity to gold, firmed above $31 on Tuesday. August silver futures tacked on $0.122, or 0.39%, to $31.015 per ounce. The white metal advanced 4% last week, adding to its 29% year-to-date gain.
Powell spoke to the Senate Banking Committee and warned that holding interest rates too high for too long could threaten economic growth prospects. But lowering interest rates too early could also threaten the central bank’s work, Powell noted.
“At the same time, in light of the progress made both in lowering inflation and in cooling the labor market over the past two years, elevated inflation is not the only risk we face,” he said in prepared remarks. “Reducing policy restraint too late or too little could unduly weaken economic activity and employment.”
Despite the poor inflation data in the first quarter, the Fed has seen two straight months of “really good” inflation reports.
“After a lack of progress toward our 2 percent inflation objective in the early part of this year, the most recent monthly readings have shown modest further progress,” Powell added. “More good data would strengthen our confidence that inflation is moving sustainably toward 2 percent.”
On Thursday, the consumer price index (CPI) is expected to ease further to 3.1% and core CPI, which strips the volatile energy and food components, is expected to stay unchanged at 3.3%.
Producer prices are forecast to have risen 0.1% last month.
As for the fundamentals impacting gold prices, the US Dollar Index (DXY) rose 0.14% to 105.15, from an opening of 105.00. The index, a gauge of the buck against a basket of currencies, is up 3.8% year-to-date. A stronger buck is bad for commodities priced in dollars because it makes it more expensive for foreign investors to purchase.
US Treasury yields were mostly up across the board. The benchmark ten-year yield rose 4.5 basis points to 4.313%. The two-year yield topped 4.64%, while the 30-year bond exceeded 4.5%.
In other metal markets, September copper futures shed $0.035, or 0.76%, to $4.5835 per pound. September platinum futures fell $14.50, or 1.43%, to $999.00 an ounce. September palladium futures plunged $27.20, or 2.68%, to $987.50 per ounce.