Gold prices hit 10-week high: What's driving the rally?
What's the story
Gold prices have continued their upward trend on Tuesday, marking a third consecutive session of gains. The rise comes as investors weigh the future of US interest rates in light of key inflation data. Gold futures on the COMEX surged to a 10-week peak of $4,484.3 per ounce, gaining $64.60 (1.46%) over the previous close. Silver also gained with COMEX silver rising by 2.03% to $66.595 per ounce during the session.
Rate impact
Gold prices surge on Fed rate cut expectations
The latest surge in gold prices is driven by expectations that the US Federal Reserve may ease its monetary policy.
Gold usually benefits from lower interest rates as it doesn't offer any yield, making it more attractive when returns on interest-bearing assets decline.
The US economy lost 23,000 jobs in July while the unemployment rate eased to 4.1% from June's 4.2%.
Data impact
US inflation data crucial for gold prices
The next major trigger for bullion markets will be the US inflation data.
The consumer price index (CPI) data is due on Wednesday, August 12, followed by producer price index (PPI) data on Thursday.
Investors will look for signs of whether inflation is cooling enough to give the Fed more room to adjust interest rates.
A softer reading could strengthen expectations of lower rates and support gold prices.
Market dynamics
Geopolitical tensions and precious metals performance
Geopolitical uncertainty is also keeping investors cautious.
US President Donald Trump has responded to Iran's conditions for a potential peace deal with demands for compensation linked to people killed in wars, attacks, and protests.
This escalation could complicate efforts to reopen the Strait of Hormuz, a key route for global energy shipments.