Gold prices fell during the North American session on Wednesday, dropping by 0.50% as traders focused on Israel's anticipated response to Iran’s missile attack on Tuesday. Geopolitical tensions have been a key factor for traders, contributing to a recent rise in Gold prices after two consecutive bearish sessions since last Friday. At this point, XAU/USD is trading at $2,648, having peaked at $2,663 earlier.
The overall market sentiment remains negative, as evidenced by US equities trading lower. Reports suggest that the situation in the Middle East may escalate, potentially leading to further gains in Bullion prices in the near term.
Israel's representative to the United Nations indicated that Iran would face repercussions for its missile strike, while US Deputy Secretary of State Kurt Campbell mentioned that the US is also considering response options. On the economic front, private sector hiring in the US exceeded expectations in September, as shown by the ADP National Employment Change data. Richmond Fed President Thomas Barkin noted that the recent 50-basis-point rate cut acknowledged that interest rates were "out of sync," and while some economic indicators suggest ongoing disinflation, he cautioned that the fight against inflation is not yet over.
Despite the Fed's decision to lower the fed funds rate, higher US Treasury yields and a stronger US Dollar pose challenges for Gold. The yield on the US 10-year Treasury note rose to 3.783%, an increase of five basis points, while the US Dollar Index (DXY) climbed 0.39% to 101.60. Investors are closely monitoring upcoming US jobs data, with Nonfarm Payrolls due on Friday.
