On Friday, Chicago Fed President Austan Goolsbee expressed that he would feel more comfortable about the economy not overheating if there were additional reports similar to April’s. This could potentially strengthen the case for monetary easing later this year. Typically, higher interest rates have a negative impact on gold, which does not provide any interest payments.
In April, gold reached a series of all-time highs due to strong central bank purchases, demand from Asian markets, and increased buying from investors seeking a safe haven amid conflicts in regions like Ukraine and the Middle East. Despite the uncertain environment and inflationary pressures, gold has seen a 12% increase in value this year.
Recent developments have made gold less appealing, particularly with signs of easing tensions in the Middle East. However, Israel’s military activities, such as moving civilians out of Rafah, suggest a potential escalation in Gaza. Cease-fire talks between Hamas and Israel have stalled, with the main point of contention being the duration of any truce. At 10:46 a.m. in London, spot gold prices rose by 0.8% to $2,319.75 per ounce. The Bloomberg Dollar Spot Index remained relatively stable