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The price of gold surged 1.69% on Monday, closing at $2471.93 per ounce. This was mainly driven by safe-haven inflows as traders anticipated U.S. inflation data this week, which could provide further insight into the Federal Reserve’s trajectory for interest rate cuts.
“Should the incoming data continue to show that inflation is moving sustainably toward our 2% goal, it will become appropriate to gradually lower the federal funds rate to prevent monetary policy from becoming overly restrictive on economic activity and employment,” Federal Reserve Governor Micchelle Bowman said in a closed meeting of the Kansas Bankers Association. She slightly moderated her typically hawkish stance, acknowledging the progress on inflation over the past few months。
Another main source of this safe-haven demand is heightened tensions in the Middle East. On Monday, Israelis intensified their operations near the southern Gaza city of Khan Younis. Meanwhile on last Tuesday, Ukrainian forces breached the Russian border and advanced into western parts of Russia’s Kursk, launching a surprise attack that exposed vulnerabilities in Russian border defenses.
(XAUUSD daily price chart)
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