Gold prices hold steady ahead of US economic data

Gold prices held their ground in a fluctuating market on Tuesday, buoyed by the ongoing Israel-Hamas conflict and anticipation surrounding crucial US economic reports. The precious metal, often considered a safe haven during times of geopolitical unrest, has seen a surge in demand due to the escalating tensions in the Middle East.

The conflict between Israel and Hamas has led investors to seek refuge in assets like gold, driving up spot prices. However, futures trading signaled caution among gold bulls, reflecting concerns about the possibility of sustained high-interest rates. The recent drop in the dollar’s value and yields from their recent peaks provided some relief to gold prices, creating a delicate balance in the market.

As of the latest update, spot gold is trading at $1,964.91 per ounce.

The past two weeks have seen a surge in gold prices, primarily attributed to the Israel-Hamas conflict. Although recent diplomatic efforts from world powers have mitigated the possibility of a major escalation, markets remain vigilant for any signs of further turmoil in the region.

Meanwhile, in the United States, investors are closely monitoring a series of economic indicators scheduled for release this week. The Purchasing Managers’ Index (PMI) data, expected later on Tuesday, is anticipated to provide insights into business activity against the backdrop of elevated interest rates and persistent inflation.

Federal Reserve Chair Jerome Powell is set to deliver a speech on Wednesday, offering potential clues about the future trajectory of monetary policy. Powell’s recent statements reiterated the central bank’s intention to maintain higher rates for an extended period and hinted at the possibility of another rate hike later this year. This speech precedes a significant Federal Reserve meeting, where the prevailing expectation is for rates to remain unchanged.

Later in the week, attention will shift to the release of the third-quarter US Gross Domestic Product (GDP) data. Additionally, the Personal Consumption Expenditures (PCE) inflation data, the Fed’s preferred gauge of inflation, is slated to conclude the week on Friday. Any indications of economic resilience and persistent inflationary pressures could strengthen the Fed’s resolve to uphold higher interest rates, potentially dampening the appeal of gold as a safe haven asset.