Gold close to one-week high

Bengaluru — Gold prices rose to a near one-week high on Monday as a slight pullback in the dollar and escalating tension in the Middle East lifted its safe-haven appeal.

Spot gold was up 0.4% at $2,021.09/oz, at 3.35am GMT, hitting its highest since February 13. US gold futures also rose 0.4% to $2,032.40/oz.

“Given recent geopolitical developments that call for tensions to drag on for longer, the yellow metal is finding some renewed traction on safe-haven flows,” said IG market strategist Yeap Jun Rong.

A UK-registered cargo ship reported being under attack in the Bab al-Mandab Strait off Yemen on Sunday, while UK Maritime Trade Operations agency reported crew abandoning a ship off Yemen after an explosion.

Meanwhile, the dollar index was down 0.1%, making greenback-priced bullion more affordable to overseas buyers.

“The FOMC [Federal open market committee] minutes will be on watch for greater cues on Fed’s policy outlook, with any hawkish take from policymakers likely to renew jitters of rates potentially being kept high for longer and that may not be good news for gold prices,” Jun Rong said.

Focus shifts to minutes from the Fed’s January policy meeting, due on Wednesday, for more clues on when it could begin cutting interest rates.

Chicago Fed president Austan Goolsbee cautioned against delaying rate cuts for too long even after data showed consumer prices rose more than expected in January.

Fed Bank of Atlanta president Raphael Bostic said that while he needs more data to convince him inflation pressures are truly falling, he is open to lowering rates at some point in the next few months.

Markets are currently pricing a 77% chance of a cut in June, according to the CME Fed Watch Tool. Lower interest rates decrease the opportunity cost of holding bullion.

Spot platinum fell 0.4% to $902.37, palladium rose 0.9% to $958.66, while silver fell 1.2% to $23.12/oz.

Reuters