Gold under pressure – London Business News | Londonlovesbusiness.com

Gold was under pressure on Tuesday to give up its gains and retreat below $2,390 per ounce.

Gold’s moves come as the US labor market signs are positive with job openings beating expectations and consumer confidence falling less than expected. Meanwhile, the very high geopolitical concerns in the Middle East and the lackluster Eurozone economy are fueling uncertainty, keeping the yellow metal on track for its gains.

In the first labor market figures of this week full of crucial data, the number of job openings in the JOLTS report rose to 8.184 million in June, which was higher than expected and the highest since March.

In addition, the Consumer Confidence reading in July fell to 100.3 from 100.4, which was also better than expected. While consumers remain bullish on the labor market, they are still wary of prices, higher interest rates and uncertainty about the future, according to the Conference Board.

Even with these better-than-expected figures, market hypothesis about the path of interest rates this year have not changed negatively, with a near-certain cut in September and another, less likely cut in November or December, which I believe is limiting the negative impact on gold.

The probability of a 25-basis point cut in September is around 90%, with another cut of the same magnitude at around 60% and 40% in November and December respectively, according CME FedWatch Tool.

On the other side of the Atlantic, the lackluster performance of the eurozone economy is fueling uncertainty about the health of the global economy, which might keep gold shining.

GDP growth in the second quarter of the eurozone, France and Spain beat expectations slightly, while the German economy contracted unexpectedly. Even as the region’s economy beat expectations, it was still only 0.3% weaker than in the first quarter. The lackluster regional economic figures continue a string of negative data that we’ve seen throughout July, which have generally indicated low sentiment among investors and business owners and executives.

Gold is also supported by the very high level of geopolitical concerns coming from the Middle East, with the region potentially being drawn into a wider regional war.

While the specter of war has been looming over the southern Lebanese front since the weekend, there are some reassuring signs that an all-out war is not as likely as it seems — even with the war cabinet authorizing Benjamin Netanyahu to plan an attack and the unofficial closure of Lebanese airspace.

White House spokesman John Kirby has said that fears of a full-scale Israeli war on Lebanon are exaggerated, according to Axios. The US, France, and countries in the region are also still trying to defuse the war, while Israeli officials believe the attack will be limited, according to The Washington Post. This is what Lebanese Foreign Minister Abdallah Bou Habib believes about the limited nature of the attack, according to CNN and Hezbollah officials according to The Wall Street Journal.