Gold prices held below $2,400 per ounce on Tuesday, pressured by a stronger dollar and Treasury yields as U.S. stocks rallied after recession fears torched the market a day earlier. Meanwhile, investors continued to look for signs that the Fed would deliver a meaningful interest rate cut by September.
The yellow metal continued to play catch-up after Monday’s market meltdown spilled over to precious metals and was trading at $2,388 per ounce midday Tuesday, down $16.09. Silver was still struggling to find a baseline, trading down $0.13 at $27.11 per ounce.
Gold found pressure from a stronger dollar and a jump in Treasury yields, but traders still believe the fundamentals remain solid for the precious metal in the near term.
Simmering tensions in the Middle East conflict increase gold’s safe haven appeal, and the market remains optimistic the Fed will deliver a meaningful interest rate cut by September – some analysts and economists have even called on officials to make an emergency cut before then, fearing they may have waited too long.
The market has priced in a 100% chance policymakers will cut rates in September, per the CME FedWatch Tool.
On Wall Street, the chaos that saw The Dow Jones Industrial Average sink by more than 1,000 points on Monday seems to have calmed, as stocks rallied on Tuesday for a gain of 535 points and the S&P 500 notched up 2%.
Recession fears were sparked Friday after a jobs report that revealed higher than expected unemployment and pointed to cracks in the larger U.S. labor market.
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