Gold up as US rate cut bets increase, Middle East conflict in focus

Gold prices rose today, Tuesday, driven by bets on the Federal Reserve reducing interest rates later this year and the demand for the metal as a safe haven in light of the uncertainty surrounding the ceasefire in Gaza.

By 0148 GMT, gold in spot transactions rose 0.1% to $2,324.75 per ounce, after increasing by more than one percent in the last session.

According to Reuters, US gold futures rose 0.1% to $2,334.30 an ounce.

“Gold has been slowly building a base over the past week to show that demand is hovering around $2,280,” said Matt Simpson, chief analyst at City Index. “The Federal Reserve continues to build momentum around what will likely be the next move to lower interest rates.”

New York Federal Reserve Bank President John Williams said on Monday that at some unspecified point the US central bank will cut interest rates. He did not provide a timetable for this, but he said that the economy was generally moving towards a better balance.

Traders expect a 64% Fed rate cut in September, according to CME’s Fed Watch tool. Low interest rates increase the attractiveness of gold, which does not generate a return.

Simpson added that “fears about the possible collapse of ceasefire talks in Gaza” also helped gold.

Investors are also closely monitoring the latest developments in the Middle East conflict. On Monday, the Islamic Resistance Movement (Hamas) agreed to a ceasefire proposal in Gaza presented by Egypt and Qatar, but Israel said the conditions did not meet its demands and went ahead with strikes on Rafah while planning to continue negotiations on the agreement.

As for other precious metals, silver fell in spot transactions 0.4% to $27.34 per ounce, while platinum increased 0.4% to $957.90.

Palladium gained 0.3% to reach $980.75.