Geopolitical tensions drive gold up

Gold is trading higher above USD2,650 per ounce on Tuesday after falling in the previous session, supported by rising geopolitical risks. Reports indicated that China conducted extensive exercises around Taiwan, deploying a record number of military aircraft and, for the first time, announcing the deployment of its coast guard to surround the island.

Meanwhile, violence in the Middle East continued to escalate. Meanwhile, markets are awaiting further indications of the Federal Reserve's interest rate path, including retail sales reports and speeches from several Fed officials.

Investors have recently scaled back expectations on the extent of further US rate cuts, as monthly employment reports and consumer inflation data beat expectations, although rising weekly jobless claims and slowing producer inflation have been offset.

The odds of a 25 basis point cut in the fed funds rate in November are currently 87%.