XAU/USD Gold recovers from Friday's close to $4,300 and reaches $4,400 early on Monday. Fading Fed rate hike bets counteract new tensions in the Middle East as the US dollar meets new supply. After a bull cross confirmation, gold's daily technical setup is still bullish
Gold is fighting around the crucial $4,400 level while maintaining the recent recovery from about $4,300 on Monday morning. But as the new week begins, buyers are still in charge, with everyone's attention focused on the Middle East updates and the US Federal Reserve's (Fed) July monetary policy meeting minutes
As markets continue to reduce expectations on a possible Fed interest rate hike in September due to declining US retail expenditure and inflation as well as a decline in consumer morale, gold is profiting from fresh US dollar (USD) weakness. After two consecutive months of improvement, the University of Michigan's (UoM) Surveys of Consumers reported on Friday that its Consumer Sentiment Index fell to 51.0 in August from 55.2 in July. 54.5 was the market estimate. According to the CME Group's FedWatch Tool, markets are currently pricing in only a 30% likelihood that the Fed will hike rates next month, compared to approximately 50% a week ago. The reopening of the Strait of Hormuz and the impending uncertainties around the US-Iran peace accord are countered by less hawkish Fed predictions, which put the US dollar on the defensive as gold buyers try to gain more control. However, given that US President Donald Trump stated on Friday that Washington intends to impose severe penalties on Iran's economy, oil prices seem to have taken off in response to the most recent reports that Israel has started bombings against Lebanon in recent days, most likely in violation of the ceasefire.
