Gold firms on Middle East flare-up ahead of Fed meeting
- By Reuters -
- Jan 29, 2024
Gold firmed on Monday as rising tensions in the Middle East lifted demand for the safe-haven asset, while markets awaited a Federal Reserve policy decision later this week for more clues on the timing of this year’s first U.S. interest rate cut.
Spot gold was up 0.2% at $2,023.14 an ounce by 09:48 a.m. ET (1448 GMT), while U.S. gold futures rose 0.3% to $2,022.20.
Washington was considering its response to the first deadly strike on its forces in the Middle
East since the Gaza war began after a drone attack in northeastern Jordan at the weekend killed three U.S. servicemen and wounded at least 34.
“That has ratcheted up the tensions in the Middle East even higher, and that’s what has the money moving into the gold and silver market on a safe-haven demand basis,” said Jim Wyckoff, senior analyst at Kitco Metals.
Benchmark U.S. 10-year bond yields slipped, increasing the appeal of non-yielding bullion.
A decision is due on Wednesday from the rate-setting Federal Open Market Committee (FOMC), which took a dovish turn in the December meeting.
“This FOMC meeting will show some guidance on when the first interest rate cut might come, and whether the Fed will lean dovish or hawkish on its monetary policy,” Wyckoff added.
Last week data showed moderate growth in U.S. prices in December, keeping annual inflation below 3% for a third consecutive month and potentially allowing the Fed to begin cutting interest rates this year.
A Reuters poll showed on Monday that uncertainty about the economy and U.S. interest rate cuts could drive record gold prices in 2024.
In other precious metals, spot silver was steady at $22.79 an ounce, hitting its lowest level since Jan. 16. Platinum rose 0.3% to $916.03 and palladium gained 0.7% to $962.64.