Gold prices experienced a slight decline on Tuesday, following a significant surge in the previous session. This decrease was influenced by an improvement in risk sentiment and a rebound in bond yields. Investors were also eagerly anticipating the release of U.S. inflation data later in the week.
Earlier in the day, spot gold reached $1,865.19 per ounce, marking its highest point since September 29. However, it subsequently retreated by 0.2% to $1,856.68 by 1032 GMT. U.S. gold futures, on the other hand, saw a 0.3% increase, reaching $1,870.20.
The previous day, gold had recorded a substantial 1.6% increase, representing its most significant one-day gain in five months. This surge was driven by heightened demand for safe haven investments due to military clashes between Israel and the Palestinian Islamist group Hamas.
Craig Erlam, a senior markets analyst at OANDA, commented on the situation, stating that markets remained sensitive to potential escalations in the conflict. However, at the moment, it appeared that the markets had stabilized.
Erlam also noted that gold had encountered resistance at the $1,865 level, with some initial profit-taking occurring after two positive days for gold, driven by risk aversion and the balanced commentary from the Federal Reserve.
Meanwhile, European stocks staged a strong rebound on Tuesday, partly due to dovish comments from U.S. Federal Reserve policymakers and a decline in oil prices, which helped ease investor anxiety.
The ongoing military conflict in the Middle East posed a potential source of volatility for investors, adding to the uncertainty surrounding the upcoming corporate earnings season and the release of crucial U.S. Consumer Price Index data on Thursday. This data could provide more insight into the Federal Reserve's future rate-hike decisions.-