Gold Price Forecast: XAU/USD gains momentum near $2,020, FOMC Minutes eyed
|- Gold price attracts some buyers around $2,020 in Tuesday’s early European session.
- Higher-than-expected US inflation figures fuelled speculation of a delay in the Fed’s move towards monetary policy easing.
- The rising Middle East geopolitical tensions and economic uncertainties lift the yellow metal.
- The FOMC Meeting Minutes will be the highlight of this week.
Gold price gains momentum for the fourth straight day during the early European session on Tuesday. The yellow metal trades in positive territory despite the rebound of the US Dollar (USD) and higher bond yields. Trading activity was low on Monday as markets closed in the US. However, investors will take more cues from the FOMC Minutes on Wednesday about the outlook for US interest rates. At press time, the gold price is trading at $2,020, adding 0.09% on the day.
Meanwhile, the US Dollar Index (DXY), which measures the value of the USD relative to a basket of global currencies, posts modest gains near 104.35. The US Treasury yields edge higher, with the 10-year yield standing at 4.30%.
Given the stronger-than-expected recent US data, investors lower their bets on the rate cut expectations, which provide some support for the US Dollar (USD). According to the CME FedWatch Tool, the markets have priced in the first 25 basis points (bps) rate cut by the Fed in the June 2024 meeting.
On the other hand, the global central banks are likely to diversify foreign reserves and accumulate gold to hedge in their portfolios amid ongoing geopolitical tensions in the Middle East and economic uncertainties. This, in turn, could boost the demand for gold, a traditional safe-haven asset.
The FOMC Meeting Minutes will be released on Wednesday, and it might provide further insights into why Fed officials are not confident enough to begin easing policy in Q1 2024. On Thursday, the preliminary US S&P Global PMI for February will be due. These events could give a clear direction to the gold price.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.