Market Analysis
On Wednesday, the price of gold stayed firm around $2,380 per troy ounce, nearing all-time highs as traders exercised caution awaiting Israel's response to Iran's recent air strike. A Reuters report mentioned a delay in the third meeting of Israel's war cabinet, originally set for Tuesday, now rescheduled for Wednesday, to determine their reaction to Iran's direct attack.
Reports from The Jerusalem Post suggest Israel has finalized plans for a counterstrike against Iran. Additionally, US National Security Advisor Jake Sullivan announced plans for new sanctions targeting Iran, along with entities supporting the Islamic Revolutionary Guard Corps and Iran's Defense Ministry, to be implemented soon.
Meanwhile, Federal Reserve Chairman Jerome Powell, speaking at the Wilson Center in Washington, downplayed expectations for rate cuts. Powell highlighted the robustness of the US economy and noted limited progress on inflation this year, suggesting it will take longer to reach the 2% inflation target. The anticipation of higher interest rates typically diminishes the attractiveness of non-yielding assets like gold.
The CME FedWatch Tool indicates an increased likelihood of interest rates remaining unchanged in the June meeting, rising to 84.8% from Monday's 78.7%. Investors are keenly watching speeches from Federal Reserve officials this week, along with Thursday's US Initial Jobless Claims, for further clues about monetary policy direction.
Paraphrasing text from "FX Street" all rights reserved by the original author.