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Gold Price Hovers Near $2,265: Geopolitics & Fed in Focus

April 2, 2024

LONDON (April 2) Gold (XAU/USD) price has entered a consolidation phase in Tuesday’s Asian trading session, stabilizing after a rally to unprecedented levels, with highs nearing the $2,265 area observed yesterday. Despite robust U.S. manufacturing data challenging the likelihood of the Federal Reserve cutting interest rates thrice in the current year, the market’s expectations of a rate reduction commencing in June remain intact.

This anticipation, coupled with ongoing geopolitical unease, particularly in the Middle East, is expected to bolster the safe-haven asset, suggesting a cautious approach before confirming a peak in the near-term XAU/USD value and anticipating any significant pullback.

Investors now await the U.S. economic indicators and statements from influential Fed officials for further direction.

Gold investors weigh the potential impact of solid U.S. manufacturing data on the Fed’s rate cut projections. Higher U.S. Treasury bond yields drive the dollar, presenting headwinds for gold.

Geopolitical Tensions Underpin Safe-Haven Demand:

Middle Eastern conflicts could curb risk appetite, offering support to gold prices.
Following Israel’s airstrike on an Iranian facility in Syria, market sentiment is cautious, with concerns about escalating regional tensions potentially enhancing gold’s appeal.

The Fed’s inflation measure, the PCE Price Index, reported a moderate inflation increase in February, maintaining expectations for Fed rate adjustments, which could limit downside risks for gold.

Today’s spotlight is on the release of the JOLTS Job Openings and U.S. Factory Orders data, along with FOMC members’ speeches, all of which could influence dollar valuations and gold price forecasts.


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