Gold prices stabilize after record highs amid global tensions, monetary policy speculation


(MENAFN) After reaching further record highs on Wednesday, gold prices exhibited a period of calm as escalating tensions in the Middle East and expectations of a potential cut in US interest rates prompted investors to seek refuge in safe haven assets. The precious metal experienced a slight decline in immediate transactions, dropping by 0.3 percent to USD2,272.79 per ounce by 1211 GMT, subsequent to touching a peak of USD2,288.09 earlier in the trading session.

Analysts attributed the modest dip in gold prices to an uptick in US bond yields, which exerted pressure on the precious metal's appeal. However, US gold futures managed to register a 0.5 percent increase, reaching USD2,293.20, indicating continued investor interest in gold as a hedge against geopolitical uncertainties and potential economic headwinds.

The surge in gold's value, which has seen gains of approximately ten percent since the outset of the year, has been fueled by robust purchases from central banks and heightened inflows into safe haven assets amidst mounting geopolitical risks. This trend underscores the enduring appeal of gold as a store of value and a perceived safe haven during times of global instability.

Meanwhile, market sentiment has been shaped by speculation surrounding the monetary policy stance of the Federal Reserve, the US central bank. Policymakers at the Federal Reserve recently indicated their inclination towards multiple interest rate cuts throughout the year, citing concerns over economic growth and inflation. However, the emergence of strong economic data has prompted some investors to question the likelihood of such aggressive monetary easing measures.

Attention now turns to Federal Reserve Chairman Jerome Powell's upcoming statements, scheduled for later in the day, as investors eagerly anticipate clues regarding the timing and magnitude of potential interest rate adjustments. Powell's remarks are poised to offer insights into the central bank's assessment of prevailing economic conditions and its policy outlook, thereby influencing market expectations and shaping gold prices in the near term.

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