Gold prices firm as geopolitical fears prompt haven buying

Gold prices firmed on Friday morning despite hotter-than-expected US inflation data, as escalating geopolitical tensions in the Middle East ramped up demand for safe haven assets.

Spot gold rose to $2,042.27/oz by late morning trade, marking a 0.6% gain on the day.

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Dollar holds steady as traders weigh inflation and geopolitics

While inflation data showed consumer prices rising at a clip faster than anticipated, supportive factors like elevated geopolitical risks and a still-accommodative Fed policy stance helped limit selling pressure on the non-yielding metal.

Traders are still betting on interest rate cuts later this year, with Fed funds futures pricing in an over 70% probability of a 25 basis point cut in March. So long as the Fed remains inclined to keep policy easy amid global turmoil, gold should continue to find buyers on any material dips.