Safe haven rise in gold
Gold rose with interest rate cut optimism and tension in the Middle East.
While gold rose on signs that the Fed will cut interest rates this year, increased geopolitical tensions in the Middle East increased safe haven demand.
Bullion closed Monday with a 1 percent increase as US policy makers focused on dovish statements. While Richmond Fed President Thomas Barkin said he expected higher interest rates to further slow the economy and cool inflation towards the central bank’s 2 percent target, New York Fed President John Williams said there would be interest rate cuts, but the decision on when will depend on interest rate cuts.
Investors were also eyeing the latest developments that boost gold’s haven status in the Middle East, with Israel rejecting a Hamas-backed ceasefire offer to end the conflict in Gaza.
Gold has gained 13 percent this year, hitting consecutive all-time highs in April even as persistent inflation indicators increased uncertainty about when the U.S. central bank will cut interest rates. Higher yields also added to the headwinds last week, with the Treasury bond market posting its worst month of the year in April.
Spot gold rose 0.2 percent to $2,327.35 per ounce at 08:46 Singapore time. The Bloomberg Dollar Spot Index was little changed. While silver lost value, palladium and platinum rose.