Home Forex XAU/USD remains capped around $2,030 amid stronger USD, geopolitical tensions

XAU/USD remains capped around $2,030 amid stronger USD, geopolitical tensions

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  • The price of gold is holding at $2035 and adding 0.05% for the day.
  • US weekly Jobless Claims fell more than expected last week.
  • The Fed’s Barkin said the central bank should be patient with rate cuts despite notable data showing inflation is falling.
  • Dallas Fed L. Logan is scheduled to speak later Friday.

The price of gold (XAU/USD) is consolidating in a narrow trading range around $2,035 per troy ounce during early Asian trading hours on Friday. Meanwhile, the US dollar index (DXY), an index of the USD’s value measured against a basket of six global currencies, is recovering above 104.00. US Treasury yields slightly higher, with the 10-year yield at 4.16%.

A drop in initial value in the US Unemployment claims it highlights the economy’s resilience and could persuade the Federal Reserve (Fed) to hold off on rate cuts in the near term. Data released by the US Labor Department on Thursday reported that weekly initial US jobless claims fell to 218,000 in the week ended February 3 from 227,000 the previous week, above the market consensus of 220,000. Continuing claims fell by 23,000 to 1.891 million in the week ending January 27.

Richmond Fed President Tom Barkin said the central bank should be patient with rate cuts despite notable data showing inflation is easing. Minneapolis Fed President Neel Kashkari said on Wednesday he believed there would be two or three rate cuts in 2024, while Fed Governor Adriana Kugler said more data was needed to confirm inflation was moving back toward the central bank’s 2% target.

Investors looked to recent comments from Fed officials that suggested fewer rate cuts for 2024 than initially expected. This in turn weighs on the yellow metal as the narrative of a prolonged high in the US reduces the incentive for investors to buy gold as they pay no interest, leading to a lower gold price.

Israeli troops on Thursday attacked areas in Rafah, the southern border town where more than half of Gaza’s population is hiding, a day after Prime Minister Benjamin Netanyahu rejected a proposal to end the war, Reuters reported. Rising geopolitical tensions in the Middle East could benefit traditional safe-haven assets like gold.

Look ahead, Dallas Fed L. Logan is scheduled to speak later on Friday. In the absence of top economic data from the United States, risk sentiment is likely to have a significant impact on the price of gold.

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