Solid Gain On Brewing Geopolitical Tensions

Gold is 0.4% lower in today’s Asia-Pac session, after closing 1.7% higher at $2472.90, its highest level since Aug 1, on Monday.

• Bullion was supported by brewing tension in the Middle East where Israel in on full alert ahead of an expected attack from Iran/Hamas. Additionally, fighting continues in Eastern Europe after Ukraine took control of over 1,000 square miles of Russian territory in a counter-offensive that kicked off over the weekend.
• Tuesday’s focus will be on US PPI data and Richmond Fed Bostic, who will discuss his economic outlook. PPI data will be scrutinised for categories that feed through to the Fed’s preferred inflation gauge, the personal consumption expenditures price index.
• US CPI is due for release on Wednesday. Consensus sees core CPI at 0.2% m/m in July after the far softer than expected 0.065% m/m in June, with a mild skew towards a “low” 0.2% per MNI’s compilation of sell-side previews. MNI feels that moving away from a base case of the Fed cutting in 25bp clips will take further downside surprises.
• Lower rates are typically positive for gold, which doesn’t pay interest.
• According to MNI’s technicals team, attention is on $2,483.7, the Jul 17 high and a bull trigger. Clearance of this hurdle would resume the uptrend.