Singapore, Jan. 24 (BNA): Gold prices rose on Tuesday as the dollar weakened, and bullion’s near-term path is likely to hinge on US economic data due this week that could influence the Federal Reserve’s interest rate strategy.
Spot gold was up 0.2% at $1,935.04 an ounce as of 0606 GMT. US gold futures rose 0.4% to $1,935.60.
Reuters reports that major hubs such as China and Hong Kong remain closed due to the Lunar New Year holiday.
The dollar index fell 0.2%, making bullion priced in US dollars affordable to many buyers.
Investors are awaiting the US GDP growth forecast for the fourth quarter due on Thursday.
“Any signs of US economic weakness will be taken as a reason for the Fed to tighten less sharply, and that could support gold, which will also take in safe-haven flows,” said Matt Simpson, senior market analyst at City Index.
“The disappointing numbers are likely to help gold climb above $1,960, but it may not breach $2,000 on its first attempt, given the importance of the number.”
Traders are mostly pricing in a 25 basis point rate hike by the Fed on Jan-Feb 31. The first policy meeting, after its pace slowed to 50bps in December, following four straight hikes of 75bps.
Lower interest rates tend to be beneficial to bullion, which reduces the opportunity cost of holding non-yielding assets.
On the physical front, India is expected to lower import duties on gold, which could lift retail sales ahead of peak demand season in the world’s second-largest bullion consumer.
India’s gold futures hit an all-time high on Tuesday, tracking gains in overseas markets and a depreciation of the rupee, but a rally dampened demand in the world’s second-biggest consumer of the precious metal, dealers said.
Spot silver gained 0.3%, to $23.52 an ounce.
Analysts at Heraeus Precious Metals said in a note that as China’s economy reopens and the disruption caused by COVID-19 lessens, it could support a consecutive year of record PV silver demand.
Platinum rose 0.8% to $1,055.25, and palladium advanced 0.5% to $1,712.57.