Gold prices rose during these moments of trading on Wednesday, coinciding with the decline in the US dollar index, while investors await a series of economic reports this week.
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Gold awaits important data
Yip Jun Rong, market analyst at IG, said: Rising geopolitical tensions may limit gold's downside, with the $2,000 level remaining under observation as support in the near term.
The dollar index fell but hovered near the six-week high reached on Tuesday. The benchmark 10-year Treasury yield also fell, but remained above 4%.
In broader financial markets, Asian stocks rose amid optimism that the Chinese authorities will provide support to its stock markets, which fell to their lowest levels in several years.
The US PMI report due on Wednesday, fourth-quarter GDP estimates due on Thursday, and personal consumption expenditures data on Friday will be key in assessing the central bank's next policy decision when it meets on January 31.
Joshua Shifrin, global head of trading strategies at Goldman Sachs (NYSE:GS), expects the Federal Reserve to cut interest rates four times this year, starting next March, with the inflation rate reaching the target level of 2% during the current year.
Traders expect five quarter-point interest rate cuts from the Fed in 2024, down from six two weeks ago. The first cut was initially seen in March, but the first cut is now expected to take place in May with a 50% probability, according to the Fed rate tracker tool available on the Investing Saudi website.
Bill Gross, co-founder of Pacific Investment Management, believes that the Federal Reserve should stop shrinking its balance sheet and start cutting interest rates to avoid a recession, pointing to its desire for 10-year US bond yields to fall to between 1% and 1.5%.
Lower interest rates reduce the opportunity cost of holding non-yielding bullion.
A Fed official said last week that the baseline for starting cuts is the third quarter.
Gold at settlement yesterday
Gold futures prices trimmed their gains when settling trading yesterday, Tuesday, as markets evaluated expectations for central banks to begin a monetary easing cycle.
Upon settlement, gold futures prices for February delivery rose by 0.2%, or $3.6, at $2,025.8 per ounce, after touching $2,039.3 during the session.
Gold and dollar now
Gold futures rise 0.25% to $2,031 an ounce.
Meanwhile, spot gold contracts rose by about 0.05% to $2,030 per ounce.
On the other hand, the dollar index fell by 0.3% to 103.11 points.
Other metals
Silver fell in spot transactions 0.3% to $22.38 per ounce, platinum settled at $900.36, and palladium fell 0.7% to $941.74.
