Gold prices saw a slight increase on Thursday following a more than 2 percent surge the previous day. Ongoing geopolitical tensions between the US and Iran boosted demand for safe-haven assets, while investors monitored the Federal Reserve’s monetary policy direction.
By 0634 GMT, spot gold climbed 0.5 percent to reach $5,004.47 per ounce. US gold futures for April delivery also rose by 0.3 percent to $5,025.10.
Kyle Rodda, a senior market analyst at Capital.com, highlighted the potential impact of Middle East conflict on gold prices, attributing the recent gains to safe-haven demand.
Despite some progress in Iran talks in Geneva this week, the White House noted remaining differences on key issues, while Russian Foreign Minister Sergei Lavrov cautioned against potential consequences of any fresh US military action against Iran.
In the latest release of January Fed minutes, policymakers showed strong consensus on maintaining interest rates at current levels. However, opinions diverged on future actions, with some open to rate hikes if inflation persists, while others favored additional cuts if inflation eases.
Gold, a non-yielding asset, typically performs well in low-interest-rate environments. Market expectations point to a potential interest rate cut in June this year, according to CME’s FedWatch Tool.
Investor focus now shifts to upcoming reports, including weekly jobless claims and the Personal Consumption Expenditures report on Friday, which serves as the Fed’s primary inflation gauge. Notably, several Asian markets, including those in Mainland China, Hong Kong, Singapore, Taiwan, and South Korea, were closed for the Lunar New Year holidays.
Christopher Wong, a strategist at OCBC, anticipates a consolidation phase in the short term before gradual upward movements in gold and silver prices. He suggests that silver might consolidate within the $70 to $90 range, while gold could trade between $4,800 and $5,100 in the interim.