Gold receives some refuge flows in the midst of risk-off sentiment and Middle Eastern tensions.
The gold price (XAUUSD) edged higher for the second straight day on Wednesday, marking the fourth day of a positive rise in the previous five, and climbed to a one-and-a-half-week high at $2,670 during the Asian session. In light of the current wars in the Middle East, the risk-off impulse viewed as a crucial component providing some Support for safe-haven precious metals.
Meanwhile, the US Dollar (USD) expected extending its recent strong gains to more than a two-month high, providing little encouragement to the gold price.
Bets on lesser Fed rate reduction should limit USD losses and constrain gold prices.
The rising expectations for less aggressive policy easing by the Federal Reserve (Fed) and wagers on a regular 25 basis point (bps) rate decrease in November should limit any major USD corrective slide. This calls for prudence before putting bullish bets on the non yielding yellow metal.
Daily Digest Market Movers: Gold price supported by a variety of variables, but lacks bullish confidence.
US Treasury bond yields fell for a second day on Tuesday as traders reacted to weaker-than-expected manufacturing data and reducing inflation fears on the back of lower oil prices. Prices rose, increasing demand for the non-yielding gold price.
The New York Federal Reserve’s Empire State Manufacturing Index plummeted to -11.9 in October, the lowest score since May and signaling deteriorating circumstances.
Fears of a supply disruption, along with a worse demand picture, have dragged crude oil prices to a two-week low, reducing inflationary pressures and allowing the US central bank to slash interest rates further.
Markets, on the other hand, are pricing in a higher probability of a smaller interest rate decrease at the next FOMC policy meeting in November.
The markets, on the other hand, are pricing in a higher probability of a smaller interest rate decrease at the next FOMC policy meeting in November, which should support the US Dollar and limit further gains for the XAUUSD.
Meanwhile, San Francisco Federal Reserve President Mary Daly said on Tuesday that the US central bank has made good progress in lowering inflation and expects one or two more rate cuts this year if economic expectations are met.
Separately, Atlanta Fed President Raphael Bostic stated that he does not see strong signals of a potential recession on the horizon as the US economy continues to function well and inflation is returning to 2%.
On Tuesday, Israeli Prime Minister Benjamin Netanyahu rejected the concept of a truce in Lebanon, while the militant group Hezbollah promised to expand its attacks, heightening the prospect of further escalation in the conflict.
The Biden administration has warned Israel that it faces serious sanctions, including the potential suspension of US military deliveries, if if it does not take quick steps to allow additional humanitarian aid into Gaza.
The market will focus on US economic releases – Monthly Retail Sales, Industrial Production, and the typical Weekly Initial Jobless Claims – as well as the Chinese macro data dump, which is due later this week.
