Gold surpassed $2,050 on soared demand on safe haven
Gold advanced on Monday, recovering the majority of the New Year's losses as demand for safe havens was fueled by ongoing disruptions in the Middle East, meanwhile traders continued to hope for an early trim for interest rate.
Spot gold advanced by 0.2% to $2,053.88 per ounce, meanwhile gold futures added 0.3% to $2,057.85 per ounce.
Demand for gold surged as hostilities between the United States and the Houthi group, who are allied with Iran, intensified during the previous week, raising the possibility of a spillover into the Israel-Hamas war.
Due to the mixed U.S. inflation data, traders continued to mainly hold onto their predictions that the Fed may start reducing interest rates as early as March 2024. This helped to keep the dollar weak and encouraged some capital flows into rate-sensitive assets.
Based on CME Fedwatch tool, traders seem to have mostly stuck to their views that the Fed will reduce interest rates by 25 basis points in March. From a 64% possibility observed the earlier week, the tool indicated traders were putting in a 70% chance of a March cut.