Gold prices experienced a slight decline during Asian trading on Tuesday, with limited support derived from escalating unrest in the Middle East. Attention remained focused on potential interest rate adjustments by the Federal Reserve (Fed).
On Monday, gold prices rose following Israel’s series of strikes on Rafah in Southern Gaza, which complicated ceasefire negotiations with Hamas. Reports indicated minimal progress in the ceasefire talks between Israel and Hamas, bolstering safe-haven demand for gold.
Speculation over U.S. interest rate cuts was also a contributing factor, particularly after weaker-than-expected nonfarm payrolls data on Friday led to substantial losses in the dollar. However, the greenback regained its strength on Tuesday.
Spot gold dipped by 0.1% to $2,322.65 per ounce, while gold futures expiring in June steadied at $2,330.95 per ounce at 01:14 ET (05:14 GMT).
Gold’s Safe-Haven Appeal Amid Middle East Unrest:
Israel’s strike on Rafah signaled an escalation in the conflict with Hamas and diminished prospects for de-escalation in the Middle East. This geopolitical tension increased safe-haven demand for gold, pushing the yellow metal back above the $2,300 level.
Furthermore, the lack of progress in ceasefire negotiations between the two parties also contributed to safe-haven interest in gold.
Despite these factors, gold remained more than $100 below its record highs achieved in April, when tensions between Iran and Israel heightened safe-haven demand. However, gold saw significant declines as tensions between the two nations did not escalate into full-scale conflict.
Focus on Potential Rate Cuts and Fed Speakers:
The stability of the dollar following last week’s losses limited major upward movements in gold, with markets awaiting further cues on interest rate adjustments from the Fed.
Separately, FOMC members Thomas Barkin and John Williams indicated in individual addresses that while rate cuts were still on the agenda for this year, the Fed required more evidence that inflation was abating.
Minneapolis Fed President Neel Kashkari is scheduled to speak later on Tuesday, adding to the anticipation surrounding Fed commentary.
Performance of Other Precious Metals and Industrial Metals:
Platinum futures rose by 0.5% to $971.75 per ounce, while silver futures fell by 0.3% to $27.538 per ounce.
In the realm of industrial metals, copper prices were mixed on Tuesday but remained close to two-year highs. The focus continued to be on tightening supplies amid Chinese production cuts and sanctions against Russia.
On the London Metal Exchange, three-month copper futures climbed by 1.1% to $10,044.50 per ton, while one-month copper futures declined by 0.2% to $4.5992 per pound.
The dynamics in the precious metals and industrial metals markets underscore ongoing global economic and geopolitical factors influencing commodity prices. Investors are closely monitoring developments for potential impacts on market trends and trading strategies.
