Gold rebounds from 2-week low as traders await US CPI, Fed testimony

Gold steadied above $4,000 an ounce after touching a two-week low, with traders awaiting US inflation data and Fed Chair Kevin Warsh's congressional testimony for clues on the rate path.

COMEX gold futures rose 0.45% to near $4,030 an ounce in midday trading Tuesday, recovering from a two-week low of $3,985 set in the prior session. The metal had fallen 2.7% on Monday to around $4,000 an ounce as the dollar strengthened and Treasury yields climbed, according to exchange data. Spot gold was trading at $4,018.50 an ounce, up 0.3% on the day, while on the Shanghai Futures Exchange, gold dropped 1.51%.

Fed Governor Christopher Waller said Monday that if upcoming data shows inflation remaining well above the 2% target, the central bank may need to raise interest rates "in the near term," according to prepared remarks. Waller described current monetary policy as being at a "crossroads," with the direction determined by new information including Tuesday's CPI report. He specifically noted concerns that price pressures appear to be broadening across the economy beyond the impact of tariff hikes or energy costs.

The US dollar index slipped 0.12% to 101.17 on Tuesday after rising 0.3% a day earlier, while the 10-year Treasury yield held near 4.62%, up about six basis points from Friday's close. Economists expect the June CPI report to show headline inflation eased to 3.8% year-over-year from 4.2% in May, with core prices rising 2.8%, according to a Dow Jones Newswires survey. A monthly decline of 0.2% in overall prices would mark the first negative reading since June 2024, reflecting falling energy costs after the short-lived US-Iran ceasefire in June.

Market pricing shows expectations for at least one rate hike by the Fed by September are almost fully priced in, with two hikes fully discounted by end-March 2027, according to CME's FedWatch tool. A hotter-than-expected CPI reading could accelerate those expectations and pressure gold, while a softer print may trigger a short-covering rally. COMEX silver fell 0.15% to $29.84 an ounce, while platinum futures declined 0.38%.

Gold remains about 12% below its all-time high above $4,500 set in May, with the next directional catalyst hinging on whether the CPI data reinforces or challenges the case for higher-for-longer rates. Warsh's semiannual testimony before the House Finance Committee on Tuesday and the Senate Banking Committee on Wednesday will be closely watched for any shift in forward guidance on the rate path. The Fed's next policy decision is scheduled for July 28-29, with the outcome likely to determine gold's trajectory into the second half of the year.

This article is for informational purposes only and does not constitute investment advice.