Gold prices are consolidating around the $2035 per troy ounce level in the early Asian trading hours, maintaining stability despite a recovering US Dollar and escalating geopolitical tensions in the Middle East.
The US Dollar Index (DXY) has managed to recover above the 104.00 mark, accompanied by an increase in US Treasury yields, particularly the 10-year yield at 4.16%. A key contributor to the Dollar’s strength was the positive economic indicator of a decline in US Initial Jobless Claims. The data revealed a drop to 218K for the week ended February 3, surpassing market expectations and reflecting the resilience of the US economy.
Federal Reserve (Fed) officials’ comments have added a layer of complexity to market expectations. Richmond Fed President Tom Barkin emphasized the need for patience on rate cuts, countering the remarkable data showing a drop in inflation. Minneapolis Fed President Neel Kashkari suggested the possibility of two or three rate cuts in 2024, while Fed Governor Adriana Kugler highlighted the importance of further data to confirm inflation returning to the central bank’s 2% target.
Meanwhile, geopolitical tensions in the Middle East, particularly in Gaza, where Israeli troops attacked areas in Rafah, contribute to a risk-off sentiment. This traditionally benefits safe-haven assets like gold.
Looking ahead, Dallas Fed L. Logan is scheduled to speak later on Friday. With limited top-tier economic data from the United States, the gold price is likely to be influenced by broader risk sentiment and ongoing geopolitical developments.
