Gold Fell On Expectations That Israel Will Respond Calmly To Iran's Missile Launch.

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Gold Fell On Expectations That Israel Will Respond Calmly To Iran's Missile Launch.
Credit: © Reuters.

Gold experienced a decline of -0.69% to settle at 72523 amid reduced safe-haven demand fueled by optimism that Israel would show restraint in response to Iran's missile attack. This sentiment shift was further supported by United States President Joe Biden's statement indicating non-support for a counterattack from Israel on Iran. Additionally, uncertainty regarding Federal Reserve rate cuts lessened, as top officials, including Chair Jerome Powell, emphasized the need for continued restrictive monetary policy until convinced of inflation's return to the target rate of 2%.

The receding Fed rate cut expectations for upcoming meetings, combined with diminished concerns over escalating Iran-Israel tensions, exerted pressure on Gold prices. Stronger-than-expected monthly Retail Sales data for March further bolstered this trend, leading to higher bond yields and a stronger US Dollar. Robust consumer spending, as evidenced by the Retail Sales growth of 0.7% in March, significantly above expectations, underscores the potential for sustained inflationary pressures. Despite these factors, San Francisco Fed Bank President Mary Daly emphasized the lack of urgency in reducing interest rates, highlighting the ongoing work needed to ensure inflation aligns with the desired target.

Technically, the market is undergoing long liquidation, with a -2.52% drop in open interest to settle at 21958, coupled with a decrease in prices by -506 rupees. Currently, Gold finds support at 72170, with a potential downside test at 71815. On the upside, resistance is anticipated at 73090, with a breakthrough potentially leading to further testing at 73655. Traders should closely monitor these levels amidst evolving geopolitical dynamics and central bank policy outlooks for Gold's future trajectory.

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