Gold has dropped by 0.59%, settling at $2,429 per ounce, despite the calm returning to the U.S. market after “Black Monday” and as investors seek new
Gold has dropped by 0.59%, settling at $2,429 per ounce, despite the calm returning to the U.S. market after “Black Monday” and as investors seek new signals to determine whether the U.S. is heading toward a recession.
Nevertheless, the outlook for the precious metal remains positive, as recent economic data suggest further interest rate cuts by the Federal Reserve (Fed).
Gold has been volatile in recent days due to high liquidity in the market. Margin calls on other asset classes likely led to the sale of some gold holdings to cover losses in other positions. The positive outlook for gold anticipates a price of $2,600 by year-end, with the next upward move expected once the Fed begins its cycle of rate cuts.
Gold is considered the ultimate safe haven during geopolitical or economic uncertainties. In this context, rising tensions in the Middle East and the possibility of an Iranian attack on Israel have increased gold’s appeal. The escalation of the conflict on multiple fronts is one of the key factors that could sustain gold’s gains while awaiting Iran’s response to Israel.
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Iran is building up its missile strength and conducting preparation drills for the anticipated response, potentially involving its allies. A simultaneous attack by Iran and its allies could overwhelm Israeli defenses, potentially leading to a broader regional conflict. This situation unfolds as diplomatic efforts are stalled following the assassination of Hamas chief negotiator Ismail Haniyeh, amid Israel’s attempts to prolong the Gaza conflict.
On the other hand, falling bond yields may not benefit gold as much, as Wall Street could shift its focus to fixed-income instruments to take advantage of yields that might decline further with the expected significant rate cuts this year.
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