Investing.com - Gold prices edged forward on Tuesday, turning slightly higher from near the unchanged mark after weak U.S. data.
But the upcoming policy decision from the Federal Reserve and a stronger dollar kept bullish traders in check.
Gold futures for August delivery on the Comex division of the New York Mercantile Exchange inched up $1.50, or 0.1%, to $1,428.40 a troy ounce by 10:26 AM ET (14:26 GMT).
Gold underwent a bullish move, hitting intraday highs immediately following the release of weak U.S. economic data. A fall in both June existing home sales and the regional manufacturing index for the Richmond area in July may have underpinned Fed rate cut expectations, but the knee-jerk reaction quickly faded.
Gold prices was also kept in check by a stronger U.S. dollar that was attributed to an agreement between U.S. President Donald Trump and Congressional leaders over the debt ceiling.
The bipartisan deal, pending approval by both chambers of Congress, would pave the way for more government spending through at least 2021 and avoid the threat of a government shutdown in that timeframe.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, gained 0.4% to 97.35 by 10:27 AM ET (14:27 GMT).
A stronger greenback is normally detrimental to the dollar-denominated metal, which becomes more expensive for holders of foreign currencies.
Investing.com senior commodity analyst Barani Krishnan said that gold bulls were “eagerly anticipating their first U.S. rate cut in over a decade” but that the wait until the July 31 announcement may feel too long.
“The good news for gold bulls is they may not have to wait out an entire week to discover the Fed’s game,” Krishnan said, arguing that policy easing by the European Central Bank on Thursday would give a final green light to a similar move from the Federal Reserve.
Markets currently expect the Fed to cut by a quarter point at the next meeting with an additional 25-basis-point reduction in September.
“Gold bulls are betting the market will shoot beyond recent six-year highs to above $1,500 an ounce if the Fed delivers the indicated cuts,” Krishnan said.
In other metals trading, silver futures rose 0.7% at $16.532 a troy ounce by 10:28 AM ET (14:28 GMT).
Palladium futures fell 0.8% to $1,517.05 an ounce, while sister metal platinum rose 0.8% to $859.35.
In base metals, copper traded down 0.7% to $2.702 a pound.