(MENAFN) Gold prices experienced a notable uptick on Monday, driven by ongoing geopolitical tensions in the Middle East and growing anticipation that the US Federal Reserve will initiate interest rate cuts later in the year, bolstering the appeal of the precious metal among investors. Spot transactions saw gold prices rise by 0.3 percent to USD2,309 per ounce by 05:00 GMT, while US gold futures climbed 0.5 percent to reach USD2,318 per ounce.
Kelvin Wong, Chief Market Analyst for the Asia-Pacific region at OANDA, highlighted investors' keen focus on developments in the Middle East and ceasefire negotiations. He noted that any setback in hopes for a truce would likely fuel further increases in gold prices, as investors seek refuge in the safe-haven asset amidst heightened geopolitical uncertainties.
Yip Jun Rong, Market Performance Strategist at IG, underscored the impact of weak economic data in the United States on expectations of impending interest rate cuts by the Federal Reserve. This sentiment, he suggested, bolsters confidence in gold as a safe haven for investors seeking shelter from market volatility.
Recent data indicating a slowdown in US job growth during April has strengthened expectations that the Federal Reserve will embark on a course of interest rate reductions later in the year. Notably, 67 percent of markets anticipate a rate cut in September, a move that would diminish the appeal of higher interest rates and further bolster gold's attractiveness as a safe-haven asset.
John Williams, President of the Federal Reserve Bank of New York, emphasized the importance of achieving the 2 percent inflation target for price stability, fueling hopes for the adoption of stimulus measures to support economic growth.
In terms of other precious metals, silver saw a notable increase of 1.3 percent to USD26 per ounce, while platinum experienced a slight decline of 0.7 percent to USD948, and palladium edged up by 0.1 percent to USD946. These movements underscore the complex interplay of geopolitical factors and monetary policy expectations shaping the broader precious metals market.
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