Gold Steadies Amid Middle East Tensions and US Labor Data

Gold prices have steadied on Tuesday as traders assess Middle East tensions and await key US labor market data due this week. The data, which includes job openings, the ADP employment report, and non-farm payrolls, will provide clues on labour market health and influence expectations for Federal Reserve monetary policy.

According to the CME FedWatch Tool, traders currently see a 65 per cent chance of a September US rate hike. This is significant because higher interest rates typically weigh on gold by boosting the appeal of yield-bearing assets.

The precious metal fell more than three per cent last Friday after Federal Reserve Chair Kevin Warsh said the US central bank would 'have work to do' if policymakers did not get the confidence they needed that inflation was heading down to 2 per cent. While gold is considered a hedge against inflation, its value can be affected by interest rates.

Meanwhile, tensions in the Middle East have risen following President Donald Trump's threat of further strikes against Iran on Monday. This has raised concerns about global economic instability and may influence market sentiment towards safe-haven assets like gold.