Gold pulled back from the monthly peak, which retested earlier this Tuesday.
The gold price (XAUUSD) attracts some sellers after an Asian session advance that brings it closer to the monthly peak, eroding some of the previous day’s significant gains of more than 1%. A generally upbeat tone in the equities markets turns out to be a major factor reducing demand for the safe-haven precious metal.
Bulls prefer to reduce their wagers amid a favorable risk tone and ahead of US inflation data.
Bulls further choose to lighten their bets The important US inflation data. The Producer Price Index (PPI) and the Consumer Price Index (CPI), schedule to released on Tuesday and Wednesday, respectively.
Geopolitical uncertainties and bets on a Fed rate drop of 50 basis points could help limit the downside.
However, the downside for the gold price appears to be restricted in light of geopolitical dangers pose by continuous Middle Eastern hostilities. Furthermore, the ongoing Russia-Ukraine confrontation should dampen market optimism. Meanwhile, prospects of further interest rate reduction from the Federal Reserve (Fed) have US Dollar (USD) bulls on the defensive, which should limit the commodity’s losses. As a result, any additional decrease may be viewed as a purchasing opportunity and will most likely be cushioned.
Daily Market Movers: Gold price bulls turn cautious amid favorable risk tone; downside appears limited.
Israel ramped up its operations near the southern Gaza city of Khan Younis on Monday, raising the prospect of a larger confrontation in the Middle East, boosting demand for the safe-haven gold price.
Israel is also bracing for an impending onslaught from Iran and the Lebanese militia Hezbollah in retribution for the assassination of Hamas leader Ismail Haniyeh in Tehran in late July.
Russian President Vladimir Putin has warned Ukraine to anticipate a worthy response to its recent cross-border incursion into the western regions of the Kursk area, which is around 12 km deep and 40 km wide.
This comes on top of market predictions for a larger, 50 basis point interest rate decrease by the Federal Reserve in September, and continues to operate effectively A tailwind for the unyielding yellow metal.
The potential for the Gold, however, remains limited in the aftermath of a positive risk tone and traders’ decision to stay on the sidelines ahead of important US inflation data.
US Producer Price Index (PPI) is coming on Tuesday.
The US Producer Price Index (PPI) is coming on Tuesday, followed by the US Consumer Price Index (CPI) on Wednesday, and should provide new insights on the Fed’s policy course.
The numbers expected to show that inflation eased in July, allowing the US central bank permission to start its policy-easing cycle, bolstering hopes for additional increases in the commodity.
