Gold Nears Record, Fed & Geopolitics Leading
Gold prices remained on an upward path on Tuesday, continuing their rally after a sharp surge in the previous session. XAU/USD traded above $4,478, up around 0.7% on the day, after surging more than 2.5% on Monday due to increased demand for safe-haven assets.
The initial surge was triggered by geopolitical escalation in Latin America. The US military operation in Venezuela and news of the detention of Nicolás Maduro—who was subsequently taken to New York to face legal proceedings—added a new layer of uncertainty to the market. However, after a large surge at the start of the week, buying began to slow as investors awaited clarity on the direction of US-Venezuela relations.
On the other hand, the relatively stable global stock market prevented some market participants from rushing to add to their safe-haven positions. This prevented additional pressure, although gold prices remained strong and struggled to decline significantly.
More broadly, gold remains supported by a combination of lingering geopolitical risks and market confidence that the Fed still has room to cut interest rates this year. Expectations of lower interest rates typically benefit gold because this asset doesn't provide a yield, thus lowering its opportunity cost.
The next focus turns to the US jobs data due later this week. This figure has the potential to shift expectations for the Fed's policy in the short term—and will determine whether gold has the strength to return to or even challenge its record high.
Source: Newsmaker.id
