Gold prices saw a decline in trading on Tuesday, yet they still hover near their highest level in two weeks, supported by a weak dollar and increasing concerns about US economic forecasts. So, what is driving the price of gold down?
Gold Price Today Spot gold prices fell by 1.16%, trading at $3,304.96 per ounce, down by $38.88. Meanwhile, gold futures experienced a larger drop, falling by 1.77% or $60.20, to reach $3,334.30 per ounce. These movements reflect continued downward pressure on gold prices at the beginning of the session.
Factors Supporting Gold Prices Although the price of gold received support from a weaker dollar index, which decreased by 0.3% to hover near its lowest level in a month against major currencies, making gold more attractive for holders of other currencies. Market participants are also concerned about the widening US budget deficit, which is a traditional factor supporting gold prices.
Last week, the US House of Representatives approved a version of President Donald Trump's tax cut bill, which the Congressional Budget Office estimated would add about $3.8 trillion to the federal government's debt over the next decade.
Why is Gold Price Falling Today? On the other hand, the demand for safe havens has partially declined amid investor optimism regarding trade tensions. The European Union announced on Monday that it approved accelerating negotiations with the United States to avoid a transatlantic trade war.
This came after President Trump backed down from his threat to impose a 50% tariff on imports from the EU, postponing the deadline to July 9 to allow for more discussions.
With these mixed signals, investors are closely watching for more US economic data in search of further clarity regarding the interest rate outlook. Their focus this week will be on speeches from several policymakers at the Federal Reserve, and the core Personal Consumption Expenditures Price Index set to be released next Friday, to obtain indicators on the direction of monetary policy.
There is also ongoing careful monitoring of global developments, including ongoing trade talks and geopolitical tensions in the Middle East and Ukraine, which can all affect gold's attractiveness as a safe haven.
