Because of predictions that major central banks would start cutting rates, gold has increased by more than 12% so far in 2024. Gold prices may rise due to renewed concerns that Israel and Hamas may engage in hostilities in the Middle East.

The US employment growth in April was not as strong as anticipated, according to figures released last week, and the unemployment rate increased from 3.8% to 3.9%. Moreover rising geopolitical tensions between Iran-Israel is also supporting the prices further.

Bullion prices are consolidating in a range as traders are currently analysing in his remarks on Wednesday, Jerome Powell, the chairman of the Federal Reserve, stated that it would not be appropriate to lower interest rates until they were confident that inflation was heading toward their target of 2%.

As the Fed kept its fund’s rate constant for the sixth consecutive meeting, citing a strong labour market and a lack of success in fighting inflation, gold prices fell below $2300.

It is currently anticipated that the central bank would only start reducing rates in September or maybe in the fourth quarter. Higher rates over extended periods of time are not good news for gold since they raise the opportunity cost of holding the yellow metal.

Following the US Q1 GDP numbers, which came in 1.6% lower than expected (2.5%), gold prices rose yesterday. Higher Treasury rates are supported by a sharp increase in Q1 inflation to 3.7%, which dampens prospects for an early reduction in Fed policy.

Despite a stronger US dollar and higher US Treasury rates, gold recovers from recent losses thanks to Chinese market demand. Gold prices got support around $2305 and prices have reversed and it is expected that prices will be consolidating between $2300-2350.

Gold prices got support around $2305 and prices have reversed and it is expected that prices will be consolidating between $2300-2350. While Silver has got strong support around $27 and an uptrend line extending from $22 to $30 on Daily charts.

As forecasted, gold prices have fallen 5.5% to $2310 (Rs 70500) now after touching a high of $2448 (~Rs 74000) in the first week of April and trading stable last week as Middle East tensions ease. Even Silver prices have fallen 10% to $27 (~Rs 80000) now after touching a high of $30 (~Rs 86000).

The financial markets are seeing a surge in risk aversion following the confirmation that Israeli rockets had attacked an Iranian target, hence intensifying geopolitical tensions in the Middle East.

The quest for a safe haven remains strong due to the growing geopolitical tensions in the Middle East. In retaliation for Iran’s attack on Israel, the US issues a warning regarding sanctions. The Fed’s “higher for longer” interest rate policy counteracts the demand for safe haven assets, but the price of gold is still rising.

Iran’s attack on Israel increased demand for safe havens, which in turn drove up the price of bullion, although significant increases were hampered by the strength of the dollar. Although it appears that most of the tension between Iran and Israel has been priced into gold prices, fresh friction or retaliation would likely drive prices higher.