On Tuesday, the price of gold dropped and remained under $2,020 for an ounce. This level was close to the lowest price seen in more than two weeks. Investors were waiting in a state of caution. They were looking forward to an important report on US inflation. They thought this report might change what people expect for future interest rates.
The situation made investors anxious. They feared that inflation might increase more than they had previously thought. This fear arose after reports showed the US job market was strong. Also, officials from the Federal Reserve made statements that seemed very strict. Due to these developments, investors began to reconsider their expectations. They had initially thought the Federal Reserve would lower interest rates significantly in 2024.
Initially, the expectation was for the Federal Reserve to cut interest rates by 160 basis points (bps) in 2024. However, now, the expectation has shifted. Investors now anticipate a total reduction in interest rates of only 110 bps.
Meanwhile, investors kept their attention on events unfolding in the Middle East. They were particularly focused on diplomatic discussions taking place in Beirut. These discussions appeared to be making some headway. There was a hint of possible progress in reducing the tensions between Israel and Hamas.