Gold price fell as USD demand increased.

On Tuesday, the gold price (XAUUSD) lost impetus. The yellow metal’s decline is being supported by fresh demand for the US dollar. However, recent US Nonfarm Payrolls (NFP) data has raised expectations that the Federal Reserve (Fed) may lower interest rates later this year. The assumption of an easing cycle may boost gold prices by making gold a more affordable option for foreign purchasers to purchase. Furthermore, significant central bank purchases and demand from Asian markets continue to boost the precious metal in the near term.

Investors will be watching Fed Governor Kashkari’s address later on Tuesday.

On the other side, signals of persistent political instability in the Middle East may increase safe-haven flows, benefiting the gold price. Neel Kashkari, President of the Fed Bank of Minneapolis, is set to speak later on Tuesday. The hawkish tone of Fed officials may bolster the USD and weigh on USD-denominated gold.

Daily Market Movers: Gold price remains firm despite inflationary environment and uncertainties.

Richmond Fed President Thomas Barkin stated that the present interest rate level could cool the economy sufficiently to bring inflation to the 2% objective, with the strength of the job market providing authorities time to gain. I am confident that inflation will fall.
John Williams, President of the New York Fed, predicted that rate reduction would occur eventually. Williams also noted that he sees employment growth slowing and that the Fed is reviewing the “totality” of data.
Markets have priced in 46 basis points (bps) of Fed rate reduction by the end of 2024, with the first forecast in September or November, according to LSEG’s rate likelihood tool.
On Monday, Hamas declared that it has accepted an Egyptian-Qatari cease-fire deal. However, Israel rejected the arrangement because it did not meet its “core demands” and continued its bombardment on Rafah in southern Gaza. Nonetheless, Israel has stated that it will continue negotiations, according to Reuters.
Gold has increased by around 12% this year, notwithstanding The heightened inflationary environment and uncertainty about when the US Federal Reserve would decrease interest rates.
The US employment figures showed that job growth slowed more than expected in April, and annual salary growth slipped below 4.0% for the first time in nearly three years.