EBC Markets Briefing | Gold stays above 2,400 after Trump shooting

Gold steadied above $2,400 on Monday on signs of cooling inflation. An unexpected drop in US consumer prices on a monthly basis bolstered hopes of a Fed interest rate cut in September.

The jump in gold prices to record highs came despite positive real rates which is expected to weigh on bullion towards the end of 2024 and 2025, HSBC's precious metals analysts said.

Specifically, they have lifted its average gold price forecast for 2024 to $2,305 and their 2025 estimates are now lowered from to $1,980. Meanwhile, the bank’s long-term forecast sits at $2,000.

ETFs continue to liquidate, counterbalanced by strong purchases in the OTC market and real money investors. Net long positions on the CME remain high, indicating limited room for further increases.

There has been a flare-up of violence in the US election. Trump was shot at while holding a campaign rally in Butler, Pennsylvania. The bullet hit his right ear and leaving his face streaked with blood.

The FBI said there were no known threats to the Republican convention - which kicks off on Monday - or anyone attending, while the Secret Service said they do not anticipate any changes to the security plan.

The yellow metal breached the key psychological resistance level, pointing to continuation of the rally. However, it could risk a sharp reversal if $2,430 still stands to deter the buyers.

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