Geopolitical Tensions Push Gold Above $2,400 an ounce Ahead of The Fed's Decision
Spot gold increased by 0.3% to $2,419.11 per ounce, buoyed by a weaker dollar as traders awaited further signals on interest rate cuts from the Federal Reserve.
- The precious metal also gained from rising geopolitical tensions in the Middle East, suggesting a potential escalation in the conflict. The threat of a full-scale war in the Middle East increased.
- Gold surged past the $2,400 per ounce mark as traders moved away from the dollar ahead of the Fed meeting's conclusion later in the day.
- The central bank is largely expected to maintain current rates. However, attention will be on any hints regarding future interest rate cuts, following some soft inflation data and dovish remarks from Fed officials.
- The general expectation is for a 25 basis point cut in September. Lower rates are advantageous for gold as they reduce the opportunity cost of holding the metal.
- The US Dollar is slightly down amid uncertainty over the Fed's policy decision. The US Dollar Index remains above 104.00, while 10-year US Treasury yields are subdued near 4.14%.
- This week is expected to be volatile for traders, with two more key US data releases: the ISM Manufacturing Purchasing Managers’ Index (PMI) and the Nonfarm Payrolls (NFP) for July.
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