• Gold is rising as bulls push the price higher again following a temporary consolidation.
• The yellow metal weakened initially on Tuesday after the news that Israel will show restraint when it strikes Iran. 
• Gold faces a headwind from a continued reduction in market bets that the Federal Reserve will need to aggressively cut interest rates.  

Gold (XAU/USD) recovers into the $2,650s on Tuesday after weakening following an easing of tensions in the Middle East. This came after a The Wall Street Journal (WSJ) exclusive in which Israeli Prime Minister Benjamin Netanyahu reportedly told US President Joe Biden that he would only strike military targets in Iran during the anticipated retaliation.  

This, and a continued reduction in market bets that the Federal Reserve (Fed) will slash interest rates, is driving the US Dollar (USD) higher and weighing on Gold price. US survey data is also showing that inflation expectations remain elevated, with the latest Michigan Consumer Sentiment Survey indicating expectations in the long-term (5-10 years) have “skyrocketed” to 7.1% in October, “the highest in 40 years” according to analysts at The Kobeissi Letter. 

Concerns regarding China, the world’s largest consumer of Gold, and the slowdown in its economy further weigh, particularly following market disappointment at the lack of clarity provided by Beijing about its much-anticipated fiscal stimulus programme.