Gold prices rose Monday morning due to the deteriorating geopolitical situation in the Middle East, and there was renewed optimism among bullion traders that the Fed would deliver a meaningful interest rate cut next month.
Meanwhile, Wall Street will be closely watching a flurry of economic data set for this week that will give investors and policymakers a better view of the U.S. inflation picture and labor market.
The yellow metal gained nearly 1% early Monday, trading up $20.65 at $2,448 per ounce. Silver was also buoyed by the same safe haven intangibles that have benefited precious metals during a period of economic and political turbulence. The white metal gained more than 1%, trading up $0.33 at $27.67 per ounce.
The rise in prices come as the Israeli-Palestinian conflict in the Middle East appeared to heat up over the weekend. Hamas leaders rejected a plan for cease-fire negotiations in favor of new terms as Israel intercepted “projectiles” that were launched into the country from inside of Lebanon – threatening to expand the war into another region. The U.S., which has pushed diplomacy, also prepared for a breakdown of talks, sending an additional guided-missile submarine to the area on Sunday.
At home, Wall Street prepared for Wednesday’s release of Consumer Price Index data for July by the U.S. Bureau of Labor Statistics to get a better handle on the inflation picture. The figure, which measures a wide range of goods and services, increased by 3% year over year in June, beating projections and cementing a third straight month of cooling inflation.
Investors will look to square those figures with the surprise jobs report from earlier this month that showed serious cracks in the labor market and touched off a major sell-off on Wall Street that reverberated throughout most of last week.
The market expects the Fed to cut interest rates at its September 18 meeting but appears evenly split over whether the cut will be a modest 25 basis points or on the more robust side at 50 basis points, according to the CME FedWatch Tool.
Gold Price Chart
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