Gold prices steady near two-week high: What traders should know

Gold prices hovered close to a two-week high on Tuesday, May 27, supported by a softer dollar and concerns over the US fiscal outlook. The market showed limited movement as investors awaited key US economic data later this week for clarity on the Federal Reserve’s interest rate path.

Global trends

Spot gold

was little changed at $3,339.99 an ounce in early Asian trade (as of 0228 GMT), while US gold futures slipped 0.8% to $3,339.80 per ounce.

The dollar index eased by 0.3%, hovering near a one-month low, making gold cheaper for holders of other currencies.

Kelvin Wong, Senior Market Analyst, Asia Pacific at OANDA, said, “At this point, we are seeing some consolidation in gold prices. The market is taking a breather and waiting for the next catalyst. However, concerns over the widening US budget deficit are supporting gold prices and driving dollar weakness.”

Last week, the US House passed a revised version of former President Trump’s tax-cut bill, which is expected to add around $3.8 trillion to the federal government’s existing $36.2 trillion debt over the next decade, as per Congressional Budget Office estimates.

Domestic snapshot

In India, 24 karat gold was priced at ₹9,813 per gram, while 22 karat stood at ₹8,995 and 18 karat at ₹7,360, according to data from GoodReturns.

Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities, noted, “Gold slipped on MCX due to volatility in dollar-rupee rate, which added resistance despite global uncertainties. The extension of EU tariff deadlines by the US eased immediate geopolitical tensions, reducing gold’s near-term appeal. We expect gold to remain volatile within ₹94,500 to ₹96,750 as investors track currency movements and trade headlines.”

Short-term consolidation, long-term opportunity

Aksha Kamboj, Vice President, India Bullion and Jewellers Association and Executive Chairperson at Aspect Global Ventures, highlighted a nuanced outlook, “Gold prices edged lower after President Trump’s tariff extension to July 9, lifting equities and reducing safe-haven demand. Still, fiscal worries, trade uncertainty, and Middle East tensions may keep gold supported. Any dips could be a strategic entry point for long-term investors looking to diversify.”

Echoing a similar view, Rahul Kalantri, VP Commodities at Mehta Equities, added, "This week’s key events like FOMC minutes and PCE inflation data will be crucial in shaping Fed rate expectations and gold sentiment.”

Markets are now focused on a series of speeches by US Federal Reserve officials and Friday’s (May 30's) release of the core Personal Consumption Expenditures (PCE) price index—the Fed’s preferred inflation gauge.

Any surprises here could sway expectations on rate cuts, with Fed funds futures currently pricing in a likely rate reduction in September.

-With inputs from Reuters