Failures have been haunting the precious metal since last Thursday. During three trading sessions, the bars lost almost 5% of their value, which is about $90 in monetary terms.
The greatest pressure on the price of the yellow asset was exerted by the Friday report of the US Department of Labor. The data on the number of jobs and unemployment for July turned out to be better than the predicted values, which increased investors' fears about a faster curtailment of the Fed's asset purchase program.
However, these days, not only the risks of interest rate increases have had a negative impact on the price of gold. On Monday, the precious metal market collapsed due to low transaction volumes in Asia: in Japan and Singapore, exchanges were closed due to holidays.
Against this background, the quotes fell by more than 5% during Asian trading. Analysts called the rollback "excessive", and the logical reaction to it was the subsequent correction.
On Tuesday, the price of gold rebounded from the 4-month low it reached in the previous session. The asset ended trading on the New York COMEX Exchange at $1,731.70. It rose by $5.20, or 0.3%.
One of the reasons for yesterday's growth in quotes may be an increase in demand for physical metal, which is observed in the United States, as well as in Europe and Asia. Due to the low price of gold, the appetite of manufacturers of jewelry, coins, and bullion has awakened.
According to experts, there is a chance that this increased interest will be able to compensate for the losses incurred as a result of the recent decline in demand from institutional investors.
Also yesterday, gold received support from the US currency. The dollar exchange rate suspended its rally and remained stable against its main competitors, which allowed the yellow asset to rise slightly.
This morning, the precious metal also continues to grow slightly against the background of weak dollar dynamics. So, at the time of preparing the publication, bullion was trading at $1,733.85. Compared to Tuesday's close, they added 0.12%, or $2.15.
Meanwhile, the US currency also rushed up. Analysts attribute such an infrequent movement of these opposing assets in one direction to the uncertainty surrounding the upcoming release of US inflation statistics.
On the one hand, economists predict a slowdown in annual inflation in July. According to them, the indicator may decrease from 5.4% to 5.3%. In this case, the dollar will continue to strengthen on a wave of optimism, because strong data can accelerate the curtailment of the Fed's stimulus policy.
On the other hand, investors hope that the rate of price growth will not justify the forecast and, on the contrary, will show an acceleration in July. They expect a new record of inflation, as it was a month earlier. In this scenario, gold will remain the winner, which is traditionally perceived by traders as a hedging tool against inflation.
Meanwhile, analysts believe that closer to the time of the release of statistics, the mood of investors may change drastically. They predict the closing of positions on gold, which still remains under very strong pressure from the dollar.