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Gold Prices Hold Steady Amid Middle East Tensions and Fed Rate Cut Speculations

Gold prices remained relatively stable in Asian trading on Tuesday, as investors assessed geopolitical tensions in the Middle East and awaited further developments on potential interest rate cuts by the Federal Reserve.

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Despite concerns over increased unrest in the Middle East, gold prices saw limited support, with attention also focused on the possibility of interest rate adjustments by the Federal Reserve.

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On Monday, gold experienced a modest uptick following Israel’s series of strikes against Rafah in Southern Gaza, complicating ongoing ceasefire negotiations with Hamas. Reports indicated that discussions between Israel and Hamas have made little progress, contributing to a sense of geopolitical uncertainty.

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Gold also found support from speculation surrounding potential interest rate cuts by the Federal Reserve, spurred by weaker-than-expected nonfarm payrolls data released on Friday. This data led to significant losses in the US dollar, bolstering the appeal of gold as an alternative asset.

In Asian trading, spot gold edged down by 0.1% to $2,322.65 per ounce, while gold futures for June delivery held steady at $2,330.95 per ounce by 01:14 ET (05:14 GMT).

The recent escalation of tensions between Israel and Hamas underscored geopolitical risks in the Middle East, prompting some investors to seek safe-haven assets like gold. However, gold remained well below its record highs reached in April, when fears of potential conflict between Iran and Israel fueled strong demand for safe-haven assets.

Meanwhile, the US dollar regained some ground after last week’s losses, limiting the upward momentum for gold as market participants awaited further guidance on potential interest rate adjustments from the Federal Reserve.

Federal Open Market Committee (FOMC) members Thomas Barkin and John Williams reiterated the central bank’s intention to lower interest rates this year, but emphasized the need for more evidence of easing inflation before taking action.

Minneapolis Fed President Neel Kashkari is scheduled to deliver remarks later on Tuesday, which could provide additional insights into the Fed’s policy outlook.

In the precious metals market, platinum futures rose by 0.5% to $971.75 per ounce, while silver futures dipped by 0.3% to $27.538 per ounce.

Turning to industrial metals, copper prices displayed mixed movements on Tuesday but remained near two-year highs. Tighter supplies, driven by Chinese production cuts and sanctions on Russia, continued to support copper prices. Three-month copper futures on the London Metal Exchange climbed by 1.1% to $10,044.50 per ton, while one-month copper futures declined by 0.2% to $4.5992 per pound.

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