Gold prices experienced a slight decline on Tuesday, following asignificant surge in the previous session. This decrease was influenced byan improvement in risk sentiment and a rebound in bond yields. Investorswere also eagerly anticipating the release of U.S. inflation data later inthe week.
Earlier in the day, spot gold reached $1,865.19 per ounce, marking itshighest point since September 29. However, it subsequently retreated by0.2% to $1,856.68 by 1032 GMT. U.S. gold futures, on the other hand, saw a0.3% 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 surgewas driven by heightened demand for safe haven investments due to militaryclashes 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 theconflict. However, at the moment, it appeared that the markets hadstabilized.
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 FederalReserve.
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Meanwhile, European stocks staged a strong rebound on Tuesday, partly dueto dovish comments from U.S. Federal Reserve policymakers and a decline inoil prices, which helped ease investor anxiety.
The ongoing military conflict in the Middle East posed a potential sourceof volatility for investors, adding to the uncertainty surrounding theupcoming corporate earnings season and the release of crucial U.S. ConsumerPrice Index data on Thursday. This data could provide more insight into theFederal Reserve’s future rate-hike decisions.-