• Gold edges lower as a result of easing hostilities in the Middle East and better-than-expected US economic data.
• US Durable Goods Orders smashed estimates on Monday, dispelling some of the pessimism around the US economy. 
• Despite risk of a correction from overweight long positions, TD Securities expects Gold to reach a long-term target of $2,700.  

Gold (XAU/USD) trades marginally lower in the $2,510s on Tuesday as tensions in the Middle East dissipate, reducing haven demand for the yellow metal. This comes after Israel and Hezbollah’s tit-for-tat missile exchange fails to escalate, though ongoing threats from Iran hover. 

Gold may also be edging lower after the release of better-than-expected US Durable Goods Orders data on Monday. The 9.9% rise recorded in July was the highest reading since May 2020 and helped dispel some of the pessimism surrounding the US economy. This, in turn, probably acted as an antidote to expectations the Federal Reserve (Fed) will need to cut interest rates aggressively to avoid a hard landing. 

A more gradual programme of cuts would limit the upside for Gold, which is a non-interest paying asset that tends to be viewed more attractively the lower rates are.  

The probability of the Fed making a mega 0.50% interest rate cut in September rather than the standard 0.25% reduction has eased back down below 30%. It had risen up to around 35% after Federal Reserve (Fed) Chairman Jerome Powell made the clearest signal yet that cuts were in pipeline at his speech in Jackson Hole on Friday.