Silver fell to around $82.65 during Asian trading on Tuesday, pressured by a modest rebound in the US dollar. Traders book some profits from recent price run-ups while reassessing the strength of the economy and inflation.
The key US economic data will be published later this week, including delayed US employment data for January and inflation reports.
The upbeat US economic data released last week provided some support to the greenback and weighed on the USD-denominated commodity price.
Consumer confidence in the US improved slightly in February, with the University of Michigan’s Consumer Sentiment Index rising to 57.3 from 56.4 in January. This figure came in above the market consensus of 55.
However, geopolitical tensions and uncertainty could boost a safe-haven asset such as XAGUSD.
Iran’s President Masoud Pezeshkian described last week’s nuclear talks with the US as “a step forward,” even as he pushed back against any attempts at intimidation. Meanwhile, the risks remain, as the Iranian foreign minister also stated that the country will strike US bases in the Middle East if it is attacked by US forces.
The release of the US Retail Sales data will be in the spotlight on Tuesday. The figure is expected to show an increase of 0.4% MoM in December, compared to 0.6% in November.
Traders will shift their attention to the delayed employment report for January, which is due on Wednesday. Markets forecast the non-farm payrolls (NFP) to increase by 70,000 in January, with the Unemployment Rate holding at 4.4%. Any signs of weakening in the US labour market and softer inflation could underpin the white metal in the near term.
Gold attracted sellers near $5,035 during the early Asian session on Tuesday, with XAUUSD edging lower amid improved risk sentiment and some profit-taking.
The yellow metal retreated after rising over the previous two days, as traders returned to equities on improved risk sentiment.
The S&P 500 extends the rally to near its all-time highs following a volatile week. Additionally, hopes for the US-Iran negotiations could undermine a traditional asset, such as gold.
The potential downside for the precious metal might be limited due to signs of strong demand.
Data over the weekend showed that the People’s Bank of China (PBOC) extended its gold buying reserve for a 15th straight month in January. The Chinese central bank’s gold holdings climbed to 74.19 million fine troy ounces by the end of January, up from 74.15 million the previous month.
(Source: OANDA)
