Gold prices surged during Tuesday’s North American session following news of Israel’s attack on Lebanon, pushing the XAU/USD spot price above the $2,400 mark. Earlier, the precious metal had hovered around this level, despite strong US data reinforcing job market tightness. XAU/USD is currently trading at $2,404, up over 0.80%.
Mixed Market Sentiment Ahead of Fed Decision
Sentiment remains mixed as a decline in US Treasury bond yields and a weaker US Dollar supported gold’s rise. Market participants are bracing for the Federal Reserve’s (Fed) monetary policy decision on Wednesday.
Economic Data and Geopolitical Developments
In Europe, economic data revealed that Germany, the bloc’s largest economy, has entered recessionary territory with weaker-than-expected preliminary Q2 2024 GDP readings. This may prompt a response from the European Central Bank (ECB), which is anticipated to cut interest rates in September.
Geopolitical tensions also played a significant role in gold’s jump above $2,400. Israel launched an attack on Beirut’s southern suburbs, targeting a Hezbollah commander, according to sources cited by Reuters.
US Economic Indicators and Fed Outlook
Across the Atlantic, the Fed is expected to hold interest rates steady but may deliver a dovish message that could suggest the beginning of an easing cycle. However, strong US jobs data released on Tuesday might deter the Fed from a dovish stance. June job openings exceeded estimates, despite upward revisions to May figures. Market participants expect Fed Chair Jerome Powell to counter aggressive monetary policy pricing by financial markets.
Investors are also closely watching upcoming economic reports, including the Institute for Supply Management (ISM) Manufacturing PMI and the Nonfarm Payrolls (NFP) report for July, which are expected to provide further insights into the economic outlook.
