GOLD PRICE KEEPS RISING ON ESCALATING GEOPOLITICAL TENSIONS AS US INFLATION COMES INTO FOCUS

• Gold price jumps above $2,360 on fresh escalation in Israel-Hamas tensions.
•  Fed’s Goolsbee warns of upside risks to unemployment if interest rates remain higher for longer.
•  US inflation data for March could come in higher than expected due to higher rentals, insurance costs, and portfolio management fees.

Gold price (XAU/USD) keeps moving higher due to fresh escalation in Israel-Hamas tensions in the Middle East region. The precious metal continues its winning spell for the third trading session on Tuesday as strong demand for safe-haven assets amid deepening geopolitical tensions keeps offsetting the negative impact of waning expectations for the Federal Reserve (Fed) pivoting to rate cuts in June.

This week, Gold’s firm appeal in the near term will be tested by the United States Consumer Price Index (CPI) data for March, which will be published on Wednesday. Monthly headline and core CPI data are expected to have risen 0.3%, higher than the pace of 0.17% required for inflation to return to the 2% target.

Higher insurance costs, portfolio management fees, and rising rentals are expected to keep inflationary pressures sticky, economists say. Stubborn inflation numbers would likely lead traders to delay their expectations that the Fed will begin reducing interest rates from June to sometime in Q3.     

Meanwhile, 10-year US Treasury yields have dropped to 4.40% after Chicago Federal Reserve President Austan Goolsbee said the central bank must consider for how long interest rates will remain higher on Monday. Goolsbee warned that the Unemployment Rate could go higher if interest rates remain high for too long.