Gold prices slipped 0.4% on Wednesday, trading below record highs amid heightened geopolitical tensions following Iran's ballistic missile attack on Israel.
While risks of a broader war in the Middle East bolstered demand for gold, a traditional safe-haven asset. However, gains in XAU/USD were capped by a stronger U.S. dollar and reduced market expectations for aggressive Federal Reserve interest rate cuts.
Iran launched ballistic missiles at Israel in response to Israeli military actions in Lebanon against Hezbollah, an Iran-backed group. Israeli Prime Minister Benjamin Netanyahu vowed retaliation, while Iran warned of "vast destruction" in response.
Despite geopolitical uncertainties, the prospect of the Fed maintaining its current monetary policy approach has limited bullish activity in the non-yielding commodity.
The U.S. Job Openings and Labor Turnover Survey (JOLTS) revealed an unexpected rise in job openings to 8.04 million in August, indicating continued labour market resilience.
Additionally, the ISM Manufacturing PMI showed persistent contraction, with a September reading of 47.2, marking the sixth consecutive month of decline.
Investors are now closely monitoring the upcoming U.S. ADP employment report, followed by Friday’s crucial Nonfarm Payrolls (NFP) data, which could provide further direction for the gold market.
