Ahead of FOMC minutes, gold climbs above $1,850 on improved sentiment

Gold prices are receiving a push forward by the significantly positive market sentiment keeping the US Dollar offered.

Investors cheered China’s planning to support the property market and the relaxation of its Covid zero-tolerance policy. A busy US economic docket keeps traders worried about the performance of the US Dollar while Minnesota Fed’s Kashkari has warned that policymakers must avoid cutting rates prematurely.

Gold price rallied to eight-month highs around $1,865.15, though slightly retraced some of its gains amidst an upbeat market sentiment, spurred by China’s support to its housing market, alongside its border reopening.

At the time of writing, the Gold Index (XAU/USD) is trading at $1,859.91, above its opening price by 1.13% versus the previous closing at $1539.00 per ounce.

Aside from this, investors waiting for US economic data has bolstered gold prices, as Tuesday’s US Dollar longs exited ahead of market-moving data. Following the S&P Global Manufacturing PMI release on Tuesday, the Institute for Supply Management (ISM) for December is expected to drop from 49.0 to 48.5. Also, the JOLTs report is estimated to hit 10 M, vs. 10.334M in the previous month, while the main spotlight would be the release of the Federal Open Market Committee (FOMC) December meeting minutes.

Fed’s Neil Kashkari (voter in 2023) said that it would be appropriate to continue to hike rates “at least at the next few meetings” until inflation has peaked and foresees the Federal Funds rate (FFR) at 5.4%. He added that the Fed must avoid cutting the policy rate prematurely and would consider cutting only when it’s convinced inflation is on its way back down to 2%.