Gold has been on a roll this year, with a 12% increase in value despite the uncertain environment and inflationary pressures. The metal reached a series of all-time highs in April due to strong central bank purchases, demand from Asian markets, and increased buying from investors seeking a safe haven amid conflicts in regions like Ukraine and the Middle East. However, recent developments have made gold less appealing, particularly with signs of easing tensions in the Middle East.
Israel’s military activities, such as moving civilians out of Rafah, suggest a potential escalation in Gaza. Cease-fire talks between Hamas and Israel have stalled, with the main point of contention being the duration of any truce. Despite these challenges, gold has remained resilient, and its price rose by 0.8% to $2,319.75 per ounce at 10:46 a.m. in London on Friday. The Bloomberg Dollar Spot Index remained relatively stable while silver, palladium, and platinum also saw gains in their respective prices.
In light of these developments and uncertainties surrounding the economy, Chicago Fed President Austan Goolsbee expressed that he would feel more comfortable about not overheating if there were additional reports similar to April’s. This could potentially strengthen the case for monetary easing later this year