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Gold approaches $2070 amid improved market sentiment

Gold prices have shown strength as the US Dollar faces challenges due to improved market sentiment. Softer US data supports the Fed’s dovish stance in upcoming policy meetings, boosting investor risk appetite.

Gold price was trading higher near $2,070 per ounce during the Asian session, recovering losses from the previous session. However, the softer economic data from the US might have put a ceiling on the dollar’s advance as it reinforces the market sentiment bias towards the Fed’s dovish stance in early 2024 monetary policy decisions.

US Initial Jobless Claims increased by 218K for the week ending December 23, surpassing the market’s projection of 210K. Pending Home Sales for November fell short of the anticipated 1.0% growth.

Subdued yields on US bond coupons reflect a sentiment anticipating lower Federal Reserve policy rates, boosting investor risk appetite and contributing to the upward movement in gold prices.

The resurgence of major shipping firms in the Red Sea indicates a cautious step towards normalization, while apprehensions persist regarding the potential closure of the Gibraltar Strait and the Mediterranean Sea by Iran.

Traders are closely monitoring the Middle East’s complex geopolitical landscape, which could impact market sentiment and the demand for safe-haven assets, and particularly gold.

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