Gold price continues to draw support from escalating geopolitical tensions in the Middle East and between Ukraine and Russia, and therefore, buyers stay unperturbed by the tempered bets for a June US Federal Reserve (Fed) interest rate cut bets.

On Tuesday, a Ukrainian drone struck one of Russia's biggest refineries, which shot up Oil prices, in turn, boosting the inflation-hedge Gold price. Additionally, investors flocked to safety in the traditional safe-haven Gold, following reports of Israel's air strikes on an Iranian embassy compound compound in Damascus, Syria. In response, Iranian President Ebrahim Raisi said it was an "inhumane assault in brazen violation of international law”, warning that it will not go unanswered.

Markets are also risk-averse in reaction to the devastating earthquake of 7.7 magnitude that struck Taiwan and caused 26 buildings to collapse, with Tsunami alerts being issued. Also, the overnight sell-off in Wall Street stocks on the back of fading June Fed rate expectations and strong US jobs data sap investors’ confidence..

Even as risk sentiment remains tepid, the US Dollar fails to capitalize due to weaker US Treasury bond yields, as a flight to safety lifts the demand for the US Treasury bonds.

Strong US ISM Manufacturing PMI and JOLTS Job Openings data have sponsored the recent upsurge in the US Treasury bond yields, anticipating that the Fed could delay its dovish policy pivot on the back of the US economic resilience.

“The ISM said on Monday that its manufacturing PMI increased to 50.3 last month, the highest and first reading above 50 since September 2022, from 47.8 in February. The rebound ended 16 straight months of contraction in manufacturing,” per Reuters. US job openings rose by 8,000 to 8.756 million on the last day of February, the Labor Department's Bureau of Labor Statistics said on Tuesday.

Despite strong data, markets are now pricing a 64% probability of a June Fed rate cut, up from a 58% chance seen a day ago. This could be attributed to the recent commentaries from Fed officials.

Cleveland Fed President Loretta Mester said Tuesday she still expects interest rate cuts this year but ruled out the next policy meeting in May. San Francisco Fed President Mary Daly noted that three reductions this year is a “very reasonable baseline” though she said nothing is promised. The Fedspeak likely triggered a sharp pullback in the US Treasury bond yields late Tuesday, prompting the US Dollar to end the day in the red.

Attention now turns toward the high-impact US ADP Employment Change data and Fed Chair Jerome Powell’s speech for fresh hints on the Fed rate cut outlook. Also, of note remains the Eurozone inflation report, ISM Services PMI and a bunch of speeches from several other Fed policymakers. Gold price is set for a volatile session, in light of an action-packed US calendar on Wednesday.