Gold price rises as Geopolitical Uncertainty grows.

The gold price (XAUUSD) Extended its winning streak to a fifth day on Wednesday. As Federal Reserve (Fed) Policymakers appear to be torn between the impact of increasing interest rates on the US economy. And the possibility of Inflation rising due to the escalating situation in the Red Sea.
Most Fed Policymakers feel that solid economic indicators. Which depict a picture of a robust labor market and strong consumer spending, have bought time to debate. Further rate decreases as These could cause price pressures to rise again.

According to the Fed’s Goolsbee, higher interest rates over an extended period of time can have an influence on labor market conditions.

Last week, Chicago Fed President Austan Goolsbee stated. That the forecast for interest rates is linked to the Fed’s confidence in inflation falling to 2%. But he also cautioned that high rates for a protracted period could have an impact on the employment side of the Fed’s dual mandate.

The Fed’s dual mandate is predicated on achieving full employment while keeping inflation at roughly 2%.

The US dollar strengthens ahead of the release of the FOMC minutes.

Despite the increase seen in January, Goolsbee and other Fed policymakers indicated inflation is still on track to meet the central bank’s 2% target.
Investors are awaiting the release of the Federal Open Market Committee (FOMC) minutes for the January monetary policy meeting. The release is anticipated to provide more clues about when the Fed will start cutting. Interest Rates.

Daily Market Movers: Geopolitics drives rally as investors await indications of Fed reversal.

Gold trades within Tuesday’s trading range of roughly $2,025 as investors await the FOMC minutes from the first monetary policy meeting of 2024 for additional information on the timetable of rate reduction.
The near-term forecast for gold is optimistic due to rising Middle Eastern tensions.
Persistent attacks by Iran backed Houthis on commercial ships in the Red Sea have heightened geopolitical tensions. During periods of geopolitical concern. Safe haven investments tend to draw more international inflows.
Signs of the Fed’s willingness to maintain interest rates higher for longer in the FOMC minutes may add to Gold’s bullish appeal.
The opportunity cost of maintaining non-yielding assets. Such as Gold rises when the Fed keeps interest rates high.
Meanwhile, the US Dollar Index (DXY), which measures the US dollar’s value. Against six major currencies, has rallied sharply from a new weekly low of approximately 103.80.
The strong USD Index recovery reflects market players’ nervousness ahead of the FOMC minutes.
Market expectations of Fed rate cuts will dictate. Future behavior in safe-haven assets.
According to the CME FedWatch tool, traders expect a 54% chance of a 25 basis point (bp) rate drop at the June policy meeting.
This week, market players will also watch for the preliminary S&P Global PMI data for February. Which will be issued on Thursday.
The Manufacturing PMI is expected to fall down to 50.5 in February from 50.7 in January. The Services PMI, which comprises sectors. That account for two thirds of the US economy, is predicted to be at 52.0, down from the previous figure of 52.5.