Gold rises, affected by tensions in the Middle East and hopes of a US interest rate cut

Gold prices rose on Monday, May 6, as continued tensions in the Middle East and expectations that the US Federal Reserve will begin lowering interest rates later in the year increased the appeal of the precious metal.

Gold rose in instant transactions 0.3% to $2,309.24 per ounce by 0427 GMT. US gold futures gained 0.5% to $2,318.80 an ounce.

The chances of reaching a ceasefire agreement in Gaza appeared to have diminished yesterday, Sunday, in light of the Islamic Resistance Movement (Hamas) insisting on its demand to end the war in the Strip in exchange for the release of the hostages, and at the same time Israeli Prime Minister Benjamin Netanyahu refused to do so.

Data on Friday showed that US job growth slowed more than expected in April, reinforcing expectations that the US central bank will start cutting interest rates later this year.

According to CME’s Fed Watch tool, markets expect 67% of US interest rates to be cut in September. Higher interest rates reduce the attractiveness of owning non-yielding gold.

The head of the US Federal Reserve in New York, John Williams, said on Friday that the inflation target of 2% is “crucial” to the US Federal Reserve’s efforts to achieve price stability.

In terms of other precious metals, silver rose in spot transactions by 1.3% to $26.89 per ounce. Platinum lost about 0.7% to $948.97, and palladium rose 0.1% to $946.58.