Gold trading alert: Israel large-scale air strikes in Lebanon, gold prices hit new highs!

Gold hit a new record high of $$ 2634.74 / ounce in Monday's session, closed at$$ 2628.33 / ounce, up about 0.24%, the Fed cut interest rates last week after the market bullish sentiment coupled with geopolitical tensions to promote gold prices, but the dollar index stabilised and rebounded, the Ukrainian President Zelensky said that the Russian-Ukrainian war is 'close to ending 'Investors need to beware of the risk of a short-term pullback in gold prices.

TD Securities commodities strategy director Bart Melek said, ‘the market is still reacting to the Federal Reserve's 50 basis point rate cut last Wednesday ...... The Fed has hinted that it is not particularly worried about inflation and will do its best to ensure that unemployment does not become a problem in the US’.

Several Fed policymakers said Monday that last week's sharp 50-basis-point rate cut was an effort to maintain what they see as a healthy equilibrium emerging in the economy, where inflation is converging toward its target level and the unemployment rate is close to a level consistent with stable prices.

The three regional Fed presidents said they supported last week's decision to cut rates, arguing that current policy was putting too much pressure on the economy at a time of weakening price pressures and rising risks in the job market - a more ‘neutral’ rate would be appropriate under the circumstances.

Melek said, if the employment rate fell sharply, which will make the market think that the Fed may be more aggressive in cutting interest rates, which is very favourable to gold, he also added that the Middle East region's unstable situation may also further promote the rise of gold.

However, Atlanta Fed President Bostic said the Fed is not ‘crazy’ pursuit of neutral interest rates, policymakers are on the magnitude and speed of interest rates may need to fall ‘intense’ debate.

The Israeli military said on Monday it was carrying out large-scale strikes against Iranian-backed Hezbollah targets in Lebanon, where the two sides are currently engaged in the fiercest exchange of fire in nearly a year of conflict.

Gold, a traditional hedge against geopolitical and economic uncertainty, is poised to have its best year in 14 years.

Massive Israeli airstrikes in Lebanon kill at least 492 people and injure over 1,000 others

Israel launched air strikes against Hezbollah targets on Monday, killing 492 people and sending tens of thousands fleeing to safety, according to Lebanese authorities.

Israel warned the Lebanese people to evacuate areas where it said Hezbollah was storing weapons. In a brief video statement to the Lebanese people, Israeli Prime Minister Benjamin Netanyahu said, ‘Israel's war is not against you, it is against Hezbollah. Hezbollah has used you as human shields for too long.’

Lebanon's health ministry said at least 492 people, including 35 children, had been killed and another 1,645 injured. A Lebanese official said it was the highest number of people killed in violence since Lebanon's 1975-1990 civil war.

Civilian families in southern Lebanon fled in cars, vans and trucks. Bombs rained down as children squeezed into their parents' laps and suitcases were strapped to the roofs of vehicles. Others fled on foot. On the beach near the Lebanese town of Tyre, people carried small bundles of belongings on their backs as they fled north on foot.

Lebanese Minister Nasser Yassin, who is coordinating the response to the crisis, told Reuters that 89 temporary shelters, including schools and other facilities, had been opened to accommodate more than 26,000 people as civilians fled ‘Israeli atrocities’.

The Israeli military said it had struck some 1,300 Hezbollah targets in southern, eastern and northern Lebanon.

Israeli Defence Minister Yoav Gallant said Monday marked an ‘important peak’ in the nearly year-long conflict, ‘a day in which we destroyed tens of thousands of rockets and precision-guided munitions ... What Hezbollah has built up over a period of 20 years since the Second Lebanon War is literally being destroyed by the IDF.’

Hezbollah said it responded to the attack by firing dozens of missiles at a military base in northern Israel.

More attacks on Lebanon are expected.

Zelensky Says Ukraine's War With Russia ‘Nearly Over’

Ukrainian President Zelensky said Ukraine's war with Russia is ‘close to ending,’ according to excerpts of an interview published Monday by ABC News.

‘I think we're closer to peace than we thought,’ Zelensky said. ‘We are closer to the end of the war.’

In the interview, he urged the U.S. and other partners to continue to support Ukraine.

Fed policymakers say job risks provide rationale for rate cuts, discuss shift to easing pace of policy

Several Federal Reserve policymakers said Monday that last week's sharp 50-basis-point rate cut was intended to maintain what they see as a healthy equilibrium emerging in the economy, with inflation moving closer to its target level and the unemployment rate approaching a level consistent with stable prices.

The three regional Fed presidents said on Monday that they support last week's decision to cut rates, that in the case of weakening price pressures, rising risks in the job market, the current policy puts too much pressure on the economy - in this case, a more ‘neutral’ interest rates are appropriate.

Chicago Fed President Goolsbee said that inflation and unemployment levels are close to the Fed's target, but ‘interest rates are the highest in decades. When you want to cool the economy, it makes sense to maintain this level of interest rates, but when you want the economy to stay as it is, it's not right’.

‘I am pleased with such a first action - the announcement last Wednesday of a 50 basis point cut in the federal funds rate - which marks a return to thinking more about the dual mandate,’ Goolsbee added.‘ If we want to achieve a soft landing, we can't get behind the curve.’

The US personal consumption expenditures (PCE) price index rose by 2.5 per cent year-on-year in July but is expected to continue to slow, key in discussions around whether the Federal Reserve could cut rates again by 50 basis points or 25 basis points at its November meeting.

The U.S. unemployment rate stood at 4.2 per cent in August, which is the median level that Fed policymakers consider consistent with stable inflation.

Atlanta Fed President Bostic said he believes the economy is approaching ‘normal’ levels of these two key statistics at a faster pace than expected, and that monetary policy should be adjusted to ease the current tight credit stance.

He said that last week's 50 basis points rate cut is the appropriate way to start the process, but in the policymakers on borrowing costs should fall how much and how fast for a ‘heated’ discussion, the Fed does not need to ‘crazy’ rate cuts.