Gold prices rose on Tuesday, driven by bets that the Federal Reserve will lower interest rates later this year and a surge in demand for the metal as a safe haven amid uncertainty surrounding the ceasefire in Gaza. Spot gold increased by 0.1% to $2,324.75 per ounce after rising more than 1% in the previous session. According to indicators from "kitco," gold prices during Tuesday's trading rose to $2,322.90 per ounce. U.S. gold futures also climbed 0.1% to $2,334.30 per ounce.
### Analyzing the Reasons
Matt Simpson, chief analyst at City Index, stated, "Gold has been slowly building a base over the past week, showing that demand hovers around $2,280," as reported by Reuters. The Federal Reserve continues to build momentum around its next move to potentially cut interest rates. On Monday, New York Fed President John Williams indicated that at an unspecified point, the U.S. central bank would reduce interest rates. He did not provide a timeline but mentioned that the economy is generally moving towards a better balance. Traders are now anticipating a 64% chance of a rate cut in September, according to the CME FedWatch tool. Additionally, Simpson noted that "concerns over the potential collapse of ceasefire talks in Gaza" have also supported gold prices.
### Market Insights
On Monday, gold prices in spot trading had declined. However, experts advise investors viewing the recent drop in global gold prices as a "golden opportunity" to purchase the precious metal as a stable asset and safe haven.
### Middle East Conflicts?
Investors are closely monitoring the latest developments in the Middle East conflict. The "popularity of gold as a safe haven and store of value" contributes to its price increase during wars and when traders are anxious about "upheavals, wars, crises, and geopolitical tensions," according to previous statements from experts.
### Scenarios Ahead
"Two scenarios with no third option" should be considered regarding how Middle East tensions affect gold prices. Geopolitical tensions, fears of Israeli retaliation to Iranian strikes, and expectations of a regional war are factors pushing gold prices to touch "historical levels," while specialists reveal "two scenarios with no third option" for the future price of the "precious metal."
