Safe-haven gold on track for third monthly gain amid geopolitical woes

Safe-haven gold was poised for a third consecutive monthly gain as geopolitical risks and central bank demand lifted bullion’s appeal, although prices fell on Tuesday as market focus shifted to the Federal Reserve’s policy meeting.

Spot gold was down 1% at $2,312.17 per ounce, pressured by firmer dollar that makes the metal more expensive for overseas buyers. U.S. gold futures fell 1.4% at $2,324.80.

Still, gold prices have gained more than 3% in April after scaling a record high of $2,431.29 earlier this month.

“The main vector behind the gains of the last couple of months has been geopolitical instability driving the safe-haven trade,” but prices have come down following reports of ceasefire talks between Israel and Hamas, said Ricardo Evangelista, senior analyst, ActivTrades.

Israeli airstrikes killed dozens of Palestinians on Monday as Hamas leaders visited Cairo for a new round of truce talks.

On investors’ radar this week is the Fed policy decision due on May 1 and Friday’s U.S. non-farm payrolls data.

Traders have toned down expectations for the timing and magnitude of U.S. rate cuts this year after hotter-than-expected inflation reports and hawkish rhetoric from Fed officials, including Chair Jerome Powell.

Powell’s stance may be strongly hawkish, pushing expectations of a first rate cut to the fourth quarter or even to next year, this scenario would bode badly for gold, Evangelista said.

Global gold demand rose by 3% year-on-year to 1,238 metric tons in the first quarter of 2024, marking the strongest first quarter since 2016, due to active over-the-counter (OTC) trading, the World Gold Council (WGC) said.

“We hold positive view on gold, but healthy correction looks likely to see another leg up to $2,500,” ANZ analysts wrote in a note.

Spot silver fell nearly 2% to $26.59 per ounce, platinum eased 1% at $938.03. But, both the metals were set for monthly gains.

Spot palladium lost 2.5% to $950.07.

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