Gold's Stabilization Amidst Syrian Tensions and Fed Watch

Gold seems to have found a new equilibrium after months of stagnation around the $3,900 level. Despite recent escalations in tensions in Syria, there are no clear signs that the commodity will fall to new lows. This is seen as a positive signal for bullion enthusiasts, especially with reports of renewed Chinese purchases. Peace is crucial for significant movements in gold prices; it could lead to lower oil prices and potentially reduced interest rates. However, the market remains cautious about the possibility of a Federal Reserve (Fed) rate hike at its next meeting, which has a 33% implied probability. If that were to occur, it might initially hit gold, but I believe this dip would be worth buying as an aggressive stance by the central bank could set the stage for lower rates in the future. However, the biggest driver in the coming months will be developments in Syria. The recent pause in hostilities has seen initial positive reactions with gold rising $58 to $4,110. However, it is important to note that a resolution of the conflict remains distant and the rise in oil prices, up almost 30% after two weeks of bombing, gives Iran significant leverage for better terms. China's potential role as a buyer could be crucial moving forward. Source original: ForexLive (InvestingLive).