Why is gold price up today?

Gold price has risen by 1.1% on Tuesday. US gold futures is also up by 0.5% to $4,190.10. Investors are now watching closely for US economic data that could offer clues on the Federal Reserve's interest rate outlook. Ricardo Evangelista, Director and CEO, ActivTrades said, "Today's modest recovery looks like a rebound following yesterday's sharp sell-off, rather than a fundamental change in sentiment."

On Monday, gold price dropped nearly 4% to as low as $4,110.55 per ounce. It hit its lowest level since August 5. Giovanni Staunovo, analyst, UBS, said, "Higher oil prices and the increased probability of further US rate hikes being priced in by market participants are the main drivers behind gold's recent weakness. This backdrop could keep US real yields and the US dollar elevated, raising the opportunity cost of holding non-yielding gold and contributing to further near-term volatility in the precious metal."

US President Donald Trump has also rejected Iran peace proposal to resolve the conflict and reopen the Strait of Hormuz. The tensions have risen in the Middle East. In addition to the remarks from several Fed policymakers, investors are currently looking for important economic data. It includes Wednesday's ADP employment data and the PCE data. According to the CME's FedWatch Tool, the markets see an approximately 68% probability of a Fed rate rise in October and a 95% chance of an hike in December currently.


Earlier this month, the US central bank has also increased rates by a quarter percentage point. It also shows that additional hikes are most likely. Beth Hammack, chief, Cleveland Fed, said on Friday, that consistent high inflation risks can make the American public accept hiked prices as the norm. The central bank cannot let it happen. This week, a series of US economic releases are scheduled. These include ADP employment report, job openings, Personal Consumption Expenditures readings and nonfarm payrolls.