Gold attracts some sellers for the second day in a row, although the downside appears limited.
The gold price (XAUUSD) trades with a negative bias for the second straight day on Monday, despite a lack of follow-through selling and remaining within striking distance of the all-time high reached last week. Against the backdrop of the prevailing risk-on atmosphere, bolstered by China’s stimulus measures, a minor US Dollar (USD) increase appears to be a crucial element imposing downward pressure on the safe-haven precious metal. However, speculations on a more aggressive policy easing by the Federal Reserve (Fed) limit any major gain for the USD and act as a tailwind for the non-yielding gold price.
Geopolitical uncertainties and dovish Fed predictions may help limit losses in the safe-haven commodity.
Geopolitical uncertainties from ongoing wars in the Middle East serve to restrict the XAUUSD’s downside. Traders are now looking forward to Fed Chair Jerome Powell’s speech to provide some momentum later in the US session.
Daily Digest Market Movers: Gold bulls remain on the sidelines amid geopolitical worries and dovish Fed views.
On Sunday, Israel escalated its fight with Iran’s allies, the Houthis in Yemen and Hezbollah in Lebanon, and launched strong aircraft assaults, raising fears of a full-fledged Middle East war.
According to the According to an Israeli Defense Forces statement, the bombings targeted dozens of aircraft, including fighter jets, power stations, and a seaport in Yemen’s Ras Issa and Hodeidah ports.
Israeli bombings in Lebanon murdered Nabil Kaouk, the deputy president of the militant group Hezbollah’s Central Council, making him the seventh commander killed in Israeli attacks in a little over a week.
Investors are now fearful that the war will spiral out of control, drawing in Iran and the United States, Israel’s major supporter, resulting in a tailwind for the safe-haven gold price.
The current market pricing shows a higher possibility that the US Federal Reserve will drop borrowing prices by 50 basis points for the second consecutive The monetary policy meeting is scheduled for November.
Dovish Fed predictions are unlikely to help the US Dollar recover from its lowest level since July 2023, but they should help limit losses for the non-yielding yellow metal.
St. Louis Fed President Alberto Musalem said on Friday that the US central bank should gradually reduce interest rates after a larger-than-usual half-point cut at the September meeting.
People’s Bank of China stated on Sunday that it would direct banks to decrease mortgage rates on current house loans by October 31.
The People’s Bank of China stated on Sunday that it would direct banks to decrease mortgage rates on current house loans by October 31.
This comes on top of last week’s deluge of monetary, fiscal, and liquidity assistance measures—China’s greatest stimulus package since the pandemic—and remains supportive. of an optimistic disposition.
China’s official Manufacturing PMI increased to 49.8 in September from 49.1, exceeding expectations of 49.5, while the NBS Non-Manufacturing PMI unexpectedly declined to 50.0 from August’s 50.3.
China’s Caixin Manufacturing PMI fell to 49.3 in September, down from 50.4 the previous month, while the Caixin Services PMI fell to 50.3 from 51.6 in August.
Meanwhile, the positive atmosphere is expected to put downward pressure on the safe-haven precious metal. As traders await Fed Chair Jerome Powell’s speech for some substantial impetus.
