Gold prices rose on Tuesday, buoyed by a softer dollar as investors eagerly await U.S. inflation data later this week to gauge the timing of potential interest rate cuts.
Spot gold advanced 0.4% to $2,359.85 per ounce by 10:16 a.m. ET (1416 GMT), while U.S. gold futures increased by 1.1% to $2,360.70.
The dollar decreased by 0.2%, reaching its lowest level in over a week, which made gold cheaper for investors using other currencies.
This week’s key economic focus is on the U.S. core personal consumption expenditures (PCE) price index, the Federal Reserve’s favored inflation gauge, set to be released on Friday.
Minutes from last week’s Fed meeting revealed that the current strategy involves keeping the benchmark interest rate unchanged.
Market participants are estimating about a 63% probability of a Fed rate cut by November. Lower interest rates typically lessen the opportunity cost of holding gold, which does not yield interest.
For the past two years, global central banks have consistently increased their gold purchases as part of a strategy to diversify their foreign currency reserves.
However, global physically-backed gold exchange-traded funds (ETFs) saw net outflows of 11.3 metric tons last week, as reported by the World Gold Council.
This pattern indicates a complex balance between immediate investor actions and long-term investment trends.In other precious metals, silver increased by 1.1% to $32.02, following a significant 4.4% rise on Monday. 
Platinum prices also climbed, gaining 1.1% to reach $1,066.05, driven by both its industrial applications and investment demand.
On the other hand, palladium experienced a decline, falling 0.8% to $981, amidst varying demand and supply challenges within the automotive industry, where it is predominantly used.
As economic indicators and central bank policies continue to evolve, precious metals remain a critical focus for investors looking to hedge against inflation and currency volatility.
The forthcoming U.S. inflation data is anticipated to significantly influence market expectations and investment approaches in the near future.
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