BENGALURU- Gold prices edged lower on Tuesday following a slight recovery in the dollar, although losses were capped by investor optimism for imminent US rate cuts and lingering concerns about the Middle East crisis.
Spot gold was down 0.4 percent to $2,507.96 per ounce. Prices have risen more than 21.5 percent this year, hitting a record high of $2,531.60 on Aug. 20.
US gold futures fell 0.5 percent to $2,543.20.
The dollar index edged higher against its rivals, making gold less attractive for other currency holders.
A September US rate cut has been set in stone, but the debate revolving around its size may prompt a wait-and-see mode as investors look forward to upcoming economic data to anchor their views, said IG market strategist Yeap Jun Rong.
Traders see a 70 percent chance of a 25-basis-point (bp) rate cut and about 30 percent probability of a bigger 50-bp reduction, according to the CME FedWatch tool. A low interest rate environment tends to boost non-yielding bullion’s appeal.
San Francisco Federal Reserve President Mary Daly said a quarter-percentage point cut in borrowing costs next month was likely.“We expect the upward trend for gold prices to persist, given its positive performance in past Fed rate-easing cycles, healthy central bank demand and its status as a good hedge against geopolitical and economic risks,” Yeap said.
