Gold rebounds to near $4,350 despite Middle East tensions
Gold price (XAU/USD) recovers some lost ground to around $4,345 during the early Asian session on Monday. However, the potential upside for the precious metal might be limited amid ongoing tensions in the Middle East and expectations that the Federal Reserve (Fed) will keep interest rates unchanged.
Reuters reported on Sunday that the Israeli military said that it intercepted waves of missiles fired from Iran for the first time since early April. Iranian officials said that any attack from Israel against Lebanon or Iran would be met with a "crushing and comprehensive response.”
US President Donald Trump said that he would call Israeli Prime Minister Benjamin Netanyahu and ask him not to retaliate. Trump further stated that Netanyahu will have 'no choice' but to accept a deal with Iran, adding that Iran's strikes have not changed his desire to conclude US-Iran negotiations.
Escalating tensions in the Middle East continue to fuel concerns over inflation and expectations of elevated interest rates, which weigh on the Gold price, a non-yielding asset.
Data released by the US Bureau of Labor Statistics (BLS) on Friday showed that the Nonfarm Payrolls (NFP) in the United States (US) rose by 172K in May, versus the 179K increase (revised from 115K). This figure came in stronger than the market expectation of 85K by a wide margin.
Meanwhile, the Unemployment Rate remained unchanged at 4.3% in May, in line with the market consensus. The upbeat US jobs report has forced traders to completely price out near-term interest rate cuts, which undermines the yellow metal.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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