Gold Rises on Trade Tensions and Federal Reserve Uncertainty
Gold prices rose on Monday as traders analyzed conflicting indicators for the US economy and awaited speeches from Federal Reserve officials to gain insight into the future of interest rates. Despite recent concerns about a possible downturn characterized by high inflation and sluggish growth, some swap traders are cautiously increasing their bets on policy easing this year, while gold investors are raising their bids in anticipation of prolonged inflation.
The precious metal experienced a gain of up to 1.3% following two consecutive weeks of losses since February. Trading volumes were lower than usual due to UK and Japanese markets being closed for a holiday. Last week’s weaker-than-expected US jobs report suggested that the economy is slowing down gradually, alleviating concerns about a possible downturn characterized by high inflation and sluggish growth. However, inflation remains persistent, limiting the actions the US central bank can take and potentially keeping bond yields stable.
Gold prices have increased by over 12% this year despite the prevailing inflation and uncertainty surrounding potential rate reductions by the Federal Reserve. A significant rally earlier in the year led to the metal reaching multiple record highs in April, driven by central bank purchases, Asian market demand, and safe-haven buying during geopolitical tensions. Recent developments in the Middle East signaling reduced likelihood of full-scale conflict have made gold less appealing to investors.
However, there are still tensions in the region, with Israel’s military instructing civilians to evacuate parts of Rafah, potentially indicating an imminent attack on the city in Gaza. Cease-fire negotiations between Hamas and Israel have stalled, with the main point of contention being the duration of any truce as demanded by the Iran-backed militant group. At 10:26 a.m., spot gold was up by 1% to $2,324.97 per ounce while silver palladium platinum also experienced gains during trading session
