Gold prices traded within a tight range on Tuesday, holding near all-time highs amid lower interest rates in the U.S. and heightened geopolitical tensions.
By 4:10 pm AEST (6:10 am GMT) spot gold prices were flat at $2,629 as buyers continue to show resilience, buoyed by dovish comments from the Federal Reserve, growing expectations of Chinese economic stimulus, and escalating geopolitical tensions in the Middle East.
At a highly anticipated press conference, People’s Bank of China (PBOC) Governor Pan Gongsheng unveiled several measures aimed at bolstering economic recovery, including a plan to reduce the reserve requirement ratio (RRR) by 50 basis points.
This has heightened expectations that the stimulus measures will invigorate the economy, thus limiting any significant pullback in gold prices. As the world’s largest consumer of gold, China’s economic health has a substantial impact on market dynamics.
In the geopolitical arena, Israel launched airstrikes in southern Lebanon, resulting in approximately 500 deaths and 1,000 injuries.
This follows a weekend exchange of missiles between Israel and Hezbollah, raising concerns about a potential broader regional conflict. Gold, traditionally viewed as a safe haven, typically benefits from such geopolitical unrest.
Additionally, gold buyers remain optimistic, with markets anticipating another 50-basis point rate hike in November, fueled by dovish rhetoric from the Fed.
Federal Reserve policymakers have noted the need for further rate cuts amid concerns over the labor market, while inflation trends closer to the Fed's 2.0% target.
Chicago Fed President Austan Goolsbee articulated a notably dovish stance, stating, “Many more rate cuts are likely needed over the next year; rates need to come down significantly.”
Looking ahead, attention will be focused on US Conference Board Consumer Confidence data, which could provide fresh trading incentives for gold prices.
