Gold prices have settled into a tight trading range this week, failing to capitalise on a weaker U.S. dollar and declining bond yields.
The precious metal is struggling to find direction after robust economic data and hawkish rhetoric from the Federal Reserve dashed hopes for an early pivot towards interest rate cuts.
Spot gold (XAU/USD) was trading at $2,031.87 by 07:45 GMT.
Markets are now pricing in rate hikes to continue higher for longer into 2024, clouding gold’s near-term outlook. However, physical gold demand should remain resilient thanks to steady central bank purchases and robust appetite in emerging markets. Geopolitical tensions, especially surrounding the Israel-Hamas conflict, may also bolster safe-haven flows into gold.
While higher rates tend to pressure gold by increasing its opportunity cost, a slew of analysts maintain a 12-month price target above $2,100 an ounce. For now, though, rangebound trading seems likely barring any shifts in the policy or geopolitical landscape.