Gold rises as risk appetite returns and geopolitical anxieties subside.
The gold price (XAUUSD) found buyers following a slight fall on Monday. The precious metal experienced a small comeback throughout Tuesday’s Asian session, which has persisted into the European morning.
The news that Israel is willing to avert a full-fledged war in the Middle East has alleviated geopolitical anxieties, allowing the safe-haven US Dollar (USD) to pare some gains.
Expectations that the Fed may hint at monetary easing on Wednesday kept US Treasury rates near mid-term lows.
Investors are increasingly focusing on the Federal Reserve (Fed) monetary policy. The ruling is due on Wednesday. The bank will most likely keep interest rates unchanged, but the focus will be on Fed Chair Jerome Powell’s upcoming press announcement. With pricing pressures on a disinflationary path and the labor market finally showing signs of fatigue, Powell suggested that the easing cycle could begin before December. This would weaken the US dollar and boost precious metals.
Daily Market movers: Gold rises within recent range as all eyes are on the Fed.
Gold is reclaiming some of the ground it lost on Monday, aided by a slightly better market sentiment as fears of a full-fledged conflict in the Middle East have subsided.
Israeli authorities promised that they want to react against Hizbullah for the rocket attack that killed twelve people people on the weekend, but they want to avoid a regional conflict in the Middle East. This has allayed market anxieties.
Later today, the Conference Board is likely to report that the Consumer Sentiment Index fell slightly in July, to 99.5 from 100.4 the prior month.
Similarly, US JOLTS job opportunities fell to 8.03 million in June from 8.14 million in May.
Fed will announce its monetary policy decision on Wednesday.
The Fed will announce its monetary policy decision on Wednesday, and recent inflation readings have raised market hopes that the bank will indicate the end of the restrictive cycle.
US 10-year yields are modestly over four-month highs, but the 2-year yield is the most closely related. Interest rate expectations remain weak, reaching their lowest levels since February.
The CME Group’s Fed Watch program predicts a 95% chance that the Fed will keep rates unchanged on Wednesday and a 100% chance that rate reduction will begin in September.
