Daily Digest Market Movers: Gold price might continue to attract haven flows amid escalating tensions in the Middle East
- A slew of stimulus measures from China last week continued to boost investors' appetite for riskier assets and drove some flows away from the traditional safe-haven Gold price for the second successive day on Monday.
- Furthermore, Federal Reserve Chair Jerome Powell adopted a more hawkish tone on the economy and said that he sees two more 25 basis point interest rate cuts this year as a baseline if the economy performs as expected.
- The markets were quick to react and scaled back expectations for a more aggressive policy easing by the Fed, prompting some follow-through profit-taking around the non-yielding yellow metal and contributing to the slide.
- Meanwhile, the markets are still pricing in the possibility of an oversized Fed rate cut by the end of this year, which, along with persistent geopolitical tensions, acts as a tailwind for the safe-haven precious metal.
- Israeli forces have begun limited, localized, and targeted ground raids in Lebanon two days after they killed the head of the armed group Hezbollah Hassan Nasrallah in an airstrike, threatening to worsen the Middle East crisis.
- Israel last week had rejected a proposal by the US and France, calling for a 21-day ceasefire on the Lebanon border to give time for a diplomatic settlement that would allow displaced civilians on both sides to return home.
- Traders now look to the US economic docket – featuring the release of the ISM Manufacturing PMI and JOLTS Jobs Opening – for some impetus ahead of other key macro data scheduled at the beginning of a new month.
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