Gold prices halted a two-week losing streak during the early Asian session on Monday, propelled by escalating tensions in the Middle East that heightened safe-haven demand for the precious metal. As a result, the gold price reached $2,025, marking a 0.33% gain on the day.
This week’s focal point is the Federal Open Market Committee (FOMC) meeting scheduled for Wednesday, where it is widely anticipated that interest rates will be maintained at 5.25–5.50%. The market will closely watch for cues from the FOMC’s press conference, with particular attention to any indications from Fed Chairman Jerome Powell regarding the possibility of a rate cut in March, which could impact the trajectory of the US Dollar.
Recent economic data revealed that the Personal Consumption Expenditures Price Index (PCE) recorded a 0.2% month-on-month increase and a 2.6% year-on-year rise in December. Notably, the core PCE figure, excluding energy and food, showed a 2.9% annual growth, a slower pace compared to November’s 3.2%. This data may influence the Fed’s decision-making process.
In a separate development, three US troops were killed and numerous others injured in an unmanned aerial drone attack near the Syrian border in northeastern Jordan. The incident adds to the rising tension in the Middle East, potentially further boosting the appeal of safe-haven assets like gold.
Looking forward, market participants eagerly await the FOMC meeting on Wednesday, which will set the tone for the week. Additionally, the Bank of England (BoE) interest rate decision on Thursday will be closely monitored, providing potential catalysts that could shape the direction of gold prices in the coming days.
