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Gold prices moved slightly higher on Wednesday as escalating geopolitical tensions in the Middle East and a weaker dollar supported the precious metal. Spot gold traded at $2,032 an ounce in morning deals.
The price rebound comes after a weak start to 2024 for gold, which fell to $2,000 an ounce this month as expectations of imminent Fed rate cuts faded. But lingering safe-haven demand amid rising tensions in the Middle East has recently helped establish a trading range of $2,000-2,035 for the metal.
Further strength in the dollar weighed on gold earlier this week. But prices reversed losses as metal markets look for guidance on potential Fed rate trims this year when U.S. GDP and inflation data is released later this week, just ahead of the central bank’s first 2024 policy meeting.
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While the Fed is expected to remain on hold, any hints at rate cuts could boost gold prices. But the metal may see muted gains near-term if rates stay higher for longer, dampening gold’s appeal.
Gold still managed a 10% gain last year as safe-haven demand increased after the breakout of the Israel-Hamas war. A continued escalation in the conflict has maintained some support for the traditional haven asset.