Gold prices gained on Tuesday, buoyed by uncertainty surrounding the incoming Trump administration’s policies and investor positioning ahead of crucial U.S. data that will offer insights into the Federal Reserve’s policy path.
Spot gold rose 0.3% to $2,669.53 per ounce as of 0227 GMT. U.S. gold futures gained 0.3% to $2,685.50.
The bullion fell about 1% on Monday as a strong U.S. dollar, boosted by robust jobs data last week, dampened investor appetite for the precious metal.
The strong jobs report also reinforced the Fed’s cautious stance on rate cuts this year, while concerns grew that tariffs imposed by President-elect Donald Trump could fuel inflation.
“The reason why gold is faring better during the current period of U.S. dollar strength than it historically has can be ascribed to the inflationary concerns of investors… gold has assumed its mantle as an inflation hedge,” said Tim Waterer, chief market analyst at KCM Trade.
U.S. consumers’ outlook on the expected path of inflation was mixed last month, a survey by the New York Federal Reserve showed.
Bullion is used as a hedge against inflation, although higher interest rates reduce the non-yielding asset’s appeal.
Investors now await U.S. consumer price index (CPI) print on Wednesday and the producer price index (PPI) report later in the day for further insights into the economy and the Fed’s 2025 policy trajectory. Several Fed officials are also due to speak this week.
“If we happen to see softer inflation figures this week, that would likely see the U.S. dollar come under selling pressure, which could boost gold as it become less expensive to buy,” Waterer said.
COMEX gold speculators raised net long positions by 12,116 contracts to 194,499 in the week to Jan. 7, data showed.
Spot silver was flat at $29.59 per ounce. Palladium climbed 0.5% to $958.10 and platinum added 0.2% to $940.75.