Gold prices rebounded on Tuesday to their highest level in two weeks, with the market showing a risk premium amid ongoing Middle-East tensions.
Prices rose as high as $2,048 an ounce on Tuesday, rebounding from a low of $2,020 an ounce early on Monday, although prices eased back later to trade almost unchanged day-on-day.
Gold’s relative strength came as geopolitical tensions once again came to the fore after a drone attack against a US military base in northeast Jordan on Sunday, which killed three US military personnel. The latest developments raise the risk of the conflict spreading, pushing gold higher as a safe-haven investment in times of turbulence.
Gold’s retracement lower to around $2,033 an ounce later on Tuesday afternoon followed the release of data showing that the number of US job openings surged in December to its highest in three months, and well above market expectations. Signs of strength in the US economy make it more likely that the US Fed would leave interest rates unchanged in the short-term, creating a headwind for non-yield-bearing assets like gold.
Looking ahead, the US Fed is widely expected to keep interest rates unchanged at 5.5% in a decision due Wednesday, but with expectations mixed over any decisions at its following meeting on March 20. Then on Thursday, the Euro Area inflation rate for January is set to be released, providing the latest clues on ECB monetary policy.
Frank’s experience covering the commodities markets spans 22 years, with a particular specialism in metals, carbon and energy markets. He has worked as a senior editor for S&P Global Commodity Insights (formerly Platts) and before this, at ICIS-LOR, a part of Reed Business Information (Reed Elsevier), where he covered the petrochemicals markets from 2003 to 2005.
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