Gold moves within familiar range as traders await further cues
LONDON (June 25) Gold (XAU/USD) trades in familiar territory in the $2,330s on Tuesday, amid a subdued market mood after a mixed session for Asian stocks and investor loss of appetite for tech stocks on Monday.
Gold yo-yos as investors await fresh cues
Gold trades about a third of a percent lower on Tuesday, still stuck in a range, amid a cautious market mood as investors await fresh macroeconomic and political news.
Of key interest will be
On Monday, San Francisco Fed President Mary Daly said she does not believe the Fed should cut rates before it is confident that inflation is headed towards 2%. At the same time Daly cautioned about not focusing on inflation to the detriment of the labor market. If unemployment continued to rise the Fed could cut rates to support demand and the labor market, according to Reuters.
The market-based probabilities of an interest-rate cut at (or before) the Fed’s September meeting remain relatively elevated at 67% compared to circa 50% last week, according to the CME FedWatch tool, which calculates chances using Fed Funds Futures prices. Such a cut would be a bullish event for Gold.
Geopolitical tensions swirl
Geopolitical factors are a key driver of Gold due to its safe-haven qualities. Upcoming elections in France and the United Kingdom could throw curve balls into the geopolitical arena as polls show a material risk of a lurch to the far right in France. In the UK, Labor looks likely to romp home on July 4 but the right-wing Reform Party continues to gather support at the expense of the Conservatives amidst fresh allegations of sleaze.
Geopolitical tensions remain elevated in the Middle East after a US-backed proposal to end the eight-month war in Gaza ran aground on Tuesday. Israeli Prime Minister Benjamin Netanyahu only agreed to a “partial ceasefire”, according to Aljazeera news.
In addition, fears of an “all-out” war with Lebanon remain alive after the Israeli government told residents of northern Israel, evacuated because of the escalating conflict with Hezbollah, not to return to their homes until the end of August, according to Israeli media.
Russia has said the US is responsible for a strike that killed at least four people including children, and injured 151 others on a crowded beach in Crimea. Russia’s foreign ministry warned retaliation would “definitely follow”. The ATACMS missiles that caused the damage were US-made but the US denied responsibility, saying it “regretted any loss of civilian life” but that Ukraine made its own “targeting decisions”, according to Aljazeera.
the US Personal Consumption Expenditures (PCE) Price Index for May out on Friday, the Federal Reserve’s (Fed) preferred inflation gauge.
Speeches from Fed members' Lisa Cook and Michelle Bowman on Tuesday could provide further clues on the trajectory of interest rates in the US, a key driver of Gold since it dictates the opportunity cost of holding the non-coupon bearing asset.
FXStreet
