Gold prices are moving sideways as expectations of a Fed cutting interest rates soon are offset by the cooling signal of geopolitical risks.
The US dollar and US bond yields have fallen, thereby supporting gold prices, after Bloomberg reported that the Director of the White House National Economic Council - Mr. Kevin Hassett is being considered by advisers and allies of US President Donald Trump as the leading candidate for the position of Chairman of the Federal Reserve (FED).
According to a source familiar with the matter, Hassett is expected to bring Trump's "friendly approach to interest rate cuts" to the Fed, something the US president has long long wanted to impact monetary policy.
Gold prices fell slightly at the beginning of the session after ABC News reported that Ukrainian officials had agreed to a plan to end the war.
The US is said to be negotiating with Russia in Abu Dhabi about a potential deal, with the participation of the head of the Ukrainian military intelligence agency.
A potential peace deal could reduce geopolitical risks and make investors take profits, said Ole Hansen, head of commodity strategy at Saxo Bank. He added that concerns in the stock market have put gold under initial selling pressure, but the negative impact is quite limited.
Gold prices are in an accumulation phase after falling slightly from a record high of more than 4,380 USD/ounce last month, as some investors are concerned that the increase is too fast. However, since the beginning of the year, gold has increased by about 55% and is aiming for the strongest year increase since 1979, supported by net buying from central banks and capital flowing into gold ETFs.
Traders are now focusing on the prospect of lower interest rates in the world's largest economy, as well as signs of stress in the currency market, a factor that Mr. Hansen believes could support gold prices in the event the Fed launches a new quantitative easing package.
In New York, at 4:21 p.m., spot gold prices fell slightly by 0.1% to $4,130.70/ounce.
Bloomberg Dollar spot Index decreased by 0.3%. Silver, platinum and palladium prices all increased.
