Gold prices slipped to a one-week low on Tuesday as investors turned to the U.S. dollar following disappointing data from China, while hopes for a pause in U.S. Federal Reserve interest rate hikes curtailed further losses. Spot gold fell 0.4% to $1,930.33 per ounce by 1126 GMT, marking its most significant daily drop since mid-August. Concurrently, U.S. gold futures declined 0.6% to $1,955.80.
The U.S. dollar advanced 0.5% to reach a three-month high, rendering gold more costly for holders of other currencies. This increase followed data indicating that China's services activity growth in August was its slowest in eight months.
However, the decline in gold prices was tempered by expectations that the Federal Reserve may cease further interest rate increases.
Recent U.S. economic data has supported predictions of a soft landing, as concerns over inflation and recession have eased. These developments have solidified expectations that the Federal Reserve may not need to raise interest rates further.
According to the CME FedWatch tool, traders see a 93% chance of the Federal Reserve leaving rates unchanged at a policy meeting scheduled for September 19-20. Additionally, about a 60% chance is predicted that rates will remain at current levels for the rest of the year.
Gold, which yields no interest, generally loses attraction when interest rates rise. Market observers will also be closely monitoring comments from Federal Reserve officials expected to speak during the week.
In other precious metals news, spot silver fell by 2% to $23.49 per ounce, registering its largest daily drop in a month. Platinum dipped 1.6% to $939.21 per ounce and palladium declined 2.1% to $1,195.85 per ounce.
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