Meanwhile, Gold hit a near one-month low after a US-China trade agreement boosted risk appetite and diminished bullion’s appeal as a safe-haven asset. A trade agreement between the US and China on Thursday on how to expedite rare earth shipments to the U.S. was seen by markets as a positive sign. Following this, global shares rallied. In the Middle East, the ceasefire agreement between Iran and Israel continues to hold following a few skirmishes at the start.
The slowdown in geopolitics has offered an opportunity for investors to start taking profit because of the forward-looking prospects of some kind of kinetic war with China and the developments in the Middle East, said Daniel Pavilonis, senior market strategist at RJO Futures.
Traders added to bets the Federal Reserve will lower short-term borrowing costs by 75 basis points in 2025, most likely starting in September, after the data. However, the data isn’t moving the needle on gold as it is seeing sell-off due to geopolitics, Pavilonis added.
A stable geopolitical and economic environment reduces gold’s safe-haven appeal driving investors towards riskier assets, while high interest rates make gold less favourable due to its non-yielding nature.
FAQs
Q1. Will US Fed cut interest rate?
A1. Traders added to bets the Federal Reserve will lower short-term borrowing costs by 75 basis points in 2025, most likely starting in September, after the data.Q2. Why have gold prices gone down?
A2. The slowdown in geopolitics has offered an opportunity for investors to start taking profit because of the forward-looking prospects of some kind of kinetic war with China and the developments in the Middle East.
