Gold trades around $2035 amid interest rate bets, geopolitical uncertainty

The price of gold is trading around $2,035.03 per ounce at the time of writing. That’s down 0.94% since yesterday’s gold price per ounce and down 1.39% from the beginning of the year. The lowest trading price within the last 24 hours: $2,031.51 per ounce. The highest gold spot price in the last 24 hours: $2,056.32 per ounce.

Gold is traded around the clock, and its price can shift as the trading day migrates from Asia to North America session.

Gold price is reacting to myriad factors, such as global supply and demand dynamics, geopolitical events, shifts in currency strength, interest rates, and macroeconomic indicators.

The precious metal is seeing selloff following the inability to go back above $2,060 as the weekly high. When investors reevaluate how long the Federal Reserve (Fed) may keep cutting interest rates, the price of precious metals declines.

This follows the publication of the strong December Consumer Price Index (CPI) report and hawkish remarks from European Central Bank officials that adjusted more general market expectations.

Even while markets are still pointing to a rate cut decision in March, Fed policymakers are taking their time embracing a dovish stance on interest rates.

Interest rates are still between 5.25 and 5.50%, but the US economy is experiencing consumer price inflation that is almost twice as fast as the legally required rate of 2%, labour demand is steady, and the risk of a recession is low.
The interest rate outlook is expected to be influenced by monthly US Retail Sales, Industrial Production data, and the Fed’s Beige Book. The chances of an interest rate cut in March have slowed down to 66%, from 70% earlier. Investors are reconsidering their optimism for the Fed starting the rate-cut cycle from March, amidst mixed data from higher headline consumer price inflation and softer factory gate price data.

The release of the monthly US Retail Sales and Industrial Producer data on Wednesday will provide more clues about when the Fed could plan rate cuts. Retail Sales are expected to grow at a higher pace of 0.4%, while consumer spending excluding automobiles is expected to grow at a steady pace of 0.2%. A soft report will firm the case for rate cuts in March.

Market participants are eager to know how the Fed is considering the timeframe for the rate-cut cycle after the release of consumer price inflation data. Gold price appeal remains unaffected, as crises in the Middle East have deepened following US and UK airstrikes.