Global gold prices are declining on Tuesday, extending losses from the previous session due to uncertainty about the Federal Reserve's next steps. Additionally, there is anticipation of stronger inflation readings this week, supporting a stronger dollar and Treasury yields.

The dollar and bond market have seen gains over the past week, with the dollar strengthening in anticipation of the Consumer Price Index (CPI) reading on Thursday, which is expected to show signs of persistent inflation.

Investor interest in gold remains low, leading to a decline in prices as the outlook for non-yielding assets is disrupted by the possibility of further interest rate hikes.

Spot gold prices have dipped slightly to $1,936.21 per ounce, while futures prices remain steady at $1,970.55 per ounce as of 20:17 ET (00:17 GMT).

The Federal Reserve's outlook on potential future rate hikes varies. Recent comments from Fed officials reveal differing views on the likelihood of further rate increases by the central bank.

Michelle Bowman, a Fed Governor, stated on Monday that additional rate hikes may be necessary to bring inflation closer to the Fed's annual target.

While inflation has significantly decreased this year, it remains well above the Fed's desired target. Core inflation has also remained persistently high.

On the other hand, John Williams, President of the Federal Reserve Bank of New York, expressed confidence that the U.S. economy is moving toward conditions that are less inflationary. He also indicated that the Fed is nearing the peak of its current rate cycle.

These statements come ahead of the release of the Consumer Price Index (CPI) data scheduled for Thursday, which is likely to show increases, according to a Reuters survey. Signs of persistent inflation in the U.S. give the Fed more room to continue raising rates.

The dollar and Treasury yields strengthened ahead of this data release, putting pressure on gold and other metals.

"If Treasury yields exceed last week’s highs, it could trigger some technical buying and have a significant negative impact on the gold price trend. This week is tied to inflation data, and any higher-than-expected results could lead to a short-term downtrend in gold prices," said Ed Moya, a senior market analyst at OANDA, in a note.

Copper prices have eased ahead of further signals from China. Copper futures have fallen by 0.1% to $3.8357 per pound on Tuesday, also impacted by the dollar's strength in the previous session.

Market attention is primarily focused on trade data and key inflation indicators from China to be released this week, which are expected to provide further guidance regarding the world's largest copper importer. However, forecasts indicate that both sets of data will show further declines in the economy, which barely grew in the second quarter.

Clear signals regarding additional stimulus measures from the Chinese government are also a major focus, following promises of more fiscal support from government officials.

Disclaimer!

This analysis is based on fundamental and technical views from reliable sources and does not constitute advice or solicitation. Always remember that this content aims to enrich readers' information. Conduct your own research on other forex information for guidance in your trading.

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