Gold firms on Middle East flare-up ahead of Fed meeting

GOLD firmed on Monday as rising tensions in the Middle East lifted demand for the safe-haven asset, while markets awaited a US Federal Reserve policy decision later this week for more clues on the timing of this year’s first US interest rate cut.

Spot gold was up 0.4% at $2,025.97 an ounce by 02:23 p.m. ET (1923 GMT).

US gold futures settled 0.4% higher at $2025.40.

Washington was considering its response to the first deadly strike on its forces in the Middle East since the Gaza war began after a drone attack in northeastern Jordan at the weekend killed three US servicemen and wounded at least 34.

“That has ratcheted up the tensions in the Middle East even higher, and that’s what has the money moving into the gold and silver market on a safe-haven demand basis,” said Jim Wyckoff, senior analyst at Kitco Metals.

Benchmark US 10-year bond yields slipped, increasing the appeal of non-yielding bullion.

A decision is due on Wednesday from the rate-setting Federal Open Market Committee, which took a dovish turn in the December meeting.

Last week data showed moderate growth in US prices in December, keeping annual inflation below 3% for a third consecutive month and potentially allowing the Fed to begin cutting interest rates this year.

A Reuters poll showed on Monday that uncertainty about the economy and US interest rate cuts could drive record gold prices in 2024.

Spot silver was up 1.2% at $23.11 an ounce, hitting its highest level since Jan. 16, while platinum rose 1.3% to $925.20. Palladium gained 2.1% to $ 975.35.