Gold retreats as Middle East worries ease

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Gold retreats as Middle East worries ease

Gold prices fell slightly on Wednesday as fears of an escalation in the Middle East conflict eased, while investors awaited crucial U.S. economic data that could shed more light on the timing of rate cuts of interest.

FUNDAMENTALS

* Spot gold was down 0.1% at $2,320.19 an ounce at 0115 GMT, after hitting its lowest level since April 5 in the previous session. Bullion’s March-April rally sent it up nearly $400 to an all-time high of $2,431.29 on April 12.

* US gold futures fell 0.4% to $2,333.80 an ounce.

* Fears of a wider regional conflict in the Middle East eased after Iran said it had no plans to retaliate following an apparent Israeli drone attack.

* Recent remarks from U.S. Federal Reserve officials have suggested there is no urgency to cut rates. Traders now expect the Fed’s first rate cut to most likely come in September.

* Higher interest rates reduce the attractiveness of holding gold without yield.

* U.S. business activity slowed in April, while inflation rates eased slightly, although input prices rose sharply, pointing to possible relief as the Fed seeks signs that the economy is lagging enough to bring inflation down further.

* Markets are awaiting March personal consumption expenditures (PCE) data – the Fed’s preferred inflation gauge – later this week to better determine the path of monetary policy.

* The European Central Bank must be convinced that inflation is returning towards its 2% target before cutting interest rates, Bundesbank President Joachim Nagel said.

* Spot silver fell 0.2% to $27.24 an ounce, platinum rose 0.3% to $910.15, while palladium fell 0.1% to 1 $018.50.

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