Gold prices held steady near a record high hit in the previous session as expectations of a U.S. interest rate cut next month increased, while oil prices fell on concerns about Chinese demand and focus on Gaza ceasefire talks.
Spot gold fell 0.2% to $2,503.5 an ounce, having hit an all-time high of $2,509.65 an ounce on Friday.
US gold futures rose 0.16% to $2,541.80 an ounce.
Data released Friday showed that construction of single-family homes in the United States fell in July as mortgage rates and home prices rose, keeping potential buyers on the sidelines, suggesting that inflation is heading lower.
Retail Sales
Last week, strong retail sales figures and lower-than-expected jobless claims, along with moderate inflation data, restored confidence in the world’s largest economy.
Traders are confident the Federal Reserve will cut interest rates on Sept. 18, and the focus is now on the size of the cut. They are pricing in a high probability of a 25 basis point rate cut and a low probability of a 50 basis point cut, according to CME’s FedWatch market monitor.
The low interest rate environment is likely to boost the appeal of non-yielding gold.
The market will now await the minutes of the US Federal Reserve’s July policy meeting next Wednesday, and a speech by Fed Chairman Jerome Powell on the US economic outlook on Friday for further clues.
As for other precious metals, silver in spot transactions fell 0.26% to $28.94 per ounce, platinum rose 0.05% to $954.95 per ounce, and palladium fell 0.1% to $950 per ounce.
Oil
Oil prices fell in early Asian trade on Tuesday as market sentiment was weighed by concerns about weak demand in top oil importer China, while investors focused on progress in Middle East ceasefire talks that could reduce supply risks.
Brent crude futures fell 0.5% to $79.30 a barrel, while West Texas Intermediate crude futures fell 0.65% to $76.15 a barrel.
Both benchmarks fell about 2 percent on Friday as investors tempered expectations for demand growth from China, but ended the week largely unchanged from the previous week after a slew of U.S. data last week showed slowing inflation and strong retail spending.
“Ongoing concerns about slowing demand in China led to a sell-off,” said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities, adding that another factor was the approaching end of the peak summer driving season in the United States.
“Tensions in the Middle East and the escalation of the war between Russia and Ukraine, which pose risks to supplies, are supporting the market,” he added.
Data from China on Thursday showed its economy lost momentum in July, with new home prices falling at the fastest pace in nine years, industrial production slowing and unemployment rising.
This raised concerns among traders about a decline in demand from China, where refineries sharply reduced crude processing rates last month due to weak demand for fuel.
Meanwhile, US Secretary of State Antony Blinken arrived in Israel on Sunday for another Middle East tour to push for a ceasefire in Gaza, but Hamas said the proposal met Israeli Prime Minister Benjamin Netanyahu’s demands for a possible resumption of the war after the exchange deal and to remain in the Philadelphi corridor.
