Gold Price Prediction: XAU/USD Sees Modest Increase Above Mid-$2,100s Amid Geopolitical Tension Risks

Gold prices are showing modest gains, hovering around $2,168 in the early Asian trading session on Monday. The increase comes amid speculation that the US Federal Reserve (Fed) may initiate rate cuts later this year, boosting investor interest in the precious metal. Traders are awaiting the release of US Gross Domestic Product (GDP) numbers for the fourth quarter, which is expected to hold steady at 3.2%, which could provide further direction for gold prices.

Last week, the Fed kept its benchmark interest rate unchanged for the fifth consecutive meeting, maintaining a range of 5.25% to 5.50%. Fed Chairman Jerome Powell indicated the possibility of three interest rate cuts in 2024, prompting increased demand for gold among investors. Market sentiment reflects a 72% probability of rate cuts starting in the June meeting, up from 65% before the rate decision, according to the CME FedWatch Tool.

Additionally, escalating geopolitical tensions in Ukraine drive safe-haven flows, benefiting gold prices. Recent missile attacks on power facilities, including an underground gas storage facility, have heightened concerns. Efforts to restore power supply are underway, particularly in Kharkiv, Ukraine’s second-largest city.

Gold traders will closely monitor the US GDP growth numbers for the fourth quarter. Stronger-than-expected data could support the Greenback and exert pressure on US Dollar-denominated gold. However, markets will be closed on Friday for Good Friday, potentially impacting trading dynamics.

XAU/USD