Gold holds above $2,000 but remains rangebound on hawkish Fed views

The yellow metal held around the $2,020 (XAU/USD) level early Monday morning, extending its rebound after slipping below key $2,000 support last week.

Fears however persist that elevated U.S. inflation will limit the Federal Reserve’s willingness to ease policy prematurely, potentially keeping a lid on further gold gains.

Prices briefly broke below $2,000 following higher U.S. inflation readings last week, which challenged hopes for the start of a Fed dovish pivot. Though the precious metal has crawled higher in the last two sessions, it faces a stiff $2,050 ceiling – its range since mid-January. Frequent central bank commentary warning rates may need to remain higher for longer continue to pressure the non-yielding asset.

Compounding concerns, the U.S. dollar index has inched toward a three-month high, adding additional headwinds for dollar-priced gold.

Investor focus now turns to January’s FOMC minutes slated for release this week, though officials already poured cold water on expectations for 2024 rate reductions.

With the Fed seemingly maintaining its inflation-fighting stance, gold continues to find its upward progress limited barring a more pronounced policy shift.