Gold price fell on Monday as Investors hoped that the Iran Israel dispute would not grow further.
The gold price (XAUUSD) begins the new week on a negative note and appears to have broken a two day winning streak. Albeit it stays limited in a similar trading range established over the previous week or so. Hopes for a de escalation of the Iran Israel conflict improve investor confidence. Which turns out to be a crucial reason driving flows away from the safe-haven precious metal.
Reduced Fed rate cut bets are keeping US bond yields high and putting pressure on the metal.
Apart from Bets that the Federal Reserve (Fed) will keep interest rates higher for longer due to persistently high inflation. In the United States put additional pressure on the non yielding commodity.
The downside for the gold market appears to be mitigated by predictions. That major central banks may lower interest rates this year. Furthermore, worsening global economic conditions should restrict any major depreciation in the XAUUSD. Traders appear hesitant and prefer to remain on the sidelines. Ahead of this week’s release of flash global PMIs on Tuesday and crucial US macro data the Advance Q1 GDP report and the Personal Consumption Expenditures (PCE) Price Index on Thursday and Friday, respectively.
Daily Market Movers: Gold pricing is under pressure from fading Safe-haven demand and hawkish Fed predictions.
Iran indicated that it has no plans to retaliate against Israel’s limited scale missile assault on Friday. Alleviating concerns about a further escalation of geopolitical tensions in the Middle East and undercutting the safe-haven gold price.
Investors have pushed back their forecasts for the Federal Reserve’s first interest rate cut to September and reduced betting on the number of rate cuts in 2024 to two, or approximately 40 basis points.
Chicago Fed President Austan Goolsbee said on Friday that progress on US inflation has slowed this year and that it would be prudent to wait for additional clarity on the inflation picture before making a policy decision.
The yield for the benchmark 10-year The US government bond is nearing a multi-month high, which is expected to act as a tailwind for the US dollar and put extra pressure on the non-yielding yellow metal.
The underlying background calls for caution before preparing for any further depreciation.
Concerns over slowing global economic development support the potential of synchronized interest rate reduction by most major central banks in the second half of this year, which might boost the XAUUSD.
Traders may also wait for this week’s publication of flash global PMI prints, the Advance US Q1 GDP report, and the US Personal Consumption Expenditures (PCE) Price Index before making new directional bets.
