- The price of gold is holding around $2,025 on Monday.
- Several Fed officials agreed that the FOMC needed time to assess economic data before cutting rates.
- Rising geopolitical tensions in the Middle East after Israel rejected a cease-fire offer by Hamas may lift the price of gold.
- Gold traders await January US CPI inflation data on Tuesday.
The price of gold (XAU/USD) is oscillating in a narrow trading range of $2,020-$2,040 during the first Asian trading hours on Monday. A significant move in gold is unlikely with an uncertain rate outlook. The Japanese market is closed for a public holiday, while markets in Hong Kong, Singapore and mainland China are closed for the Lunar New Year holiday. The price of gold is currently trading near $2,025, down 0.02% on the day.
Federal Reserve System (Fed) Chairman Jerome Powell said last week that while the central bank wants to see continued strong growth, a strong economy threatens to push up inflation. Meanwhile, several Fed officials said they wanted more time to see if inflation would continue to ease. Minneapolis Fed President Neel Kashkari and Boston Fed President Susan Collins agreed that the FOMC has time to assess economic data before cutting rates.
Market players will take further cues from January US inflation data due on Tuesday. Caption Consumer Price index (CPI) for January is expected to slow from 3.4% in December to 3.0% in January. Inflation news over the next few months could be key to determining when the Fed will cut its benchmark interest rate.
In addition, ongoing geopolitical tensions in the Middle East after Israel rejected a cease-fire offer by Hamas may boost traditional safe-haven assets such as gold. However, the yellow metal's rise may be limited if China's economy shows signs of deterioration. Last week, China's consumer prices fell at the fastest pace in 15 years in January, highlighting the challenge for officials trying to restore investor confidence in the world's second-largest economy.
Looking ahead, gold traders will be watching Tuesday's US CPI inflation data. Later this week, US retail sales will be due on Thursday and the January producer price index (PPI) will be released on Friday. Market participants will take cues from the data and find trading opportunities around the price of gold.