Gold prices climbed for a third straight session on Monday, as bullion held onto safe-haven gains from elevated tensions in the Middle East and after US producer prices data last week renewed bets for an early rate cut by the Federal Reserve.
Fundamentals
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Spot gold was up 0.3% at $2,054.73 per ounce, as of 0228 GMT, after marking its biggest daily gain since Dec. 12 on Friday.
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US gold futures rose 0.4% to $2,058.70.
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The war between Israel and Hamas reached its 100th day as Israel continued its fierce offensive, while Houthi threatening a response to US air strikes on Yemen kept risks of escalations in the Middle East elevated.
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Gold, historically seen as a safe store of wealth, tends to gain during times of political and economical uncertainty.
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Bets for a Fed cut in March gathered some steam after data on Friday showed US producer prices unexpectedly fell in December, sending Treasury yields sliding in response.
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The US Fed is expected to hold its policy rate steady at the Jan. 30-31 meeting. Financial markets see a 79% chance that rate cuts will begin in March.
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Overall, traders are betting on 166 basis points (bps) of Fed rate cuts this year, higher than Friday morning’s bets of 150 bps, according to LSEG’s interest rate probability app, IRPR.
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Lower interest rates increase non-yielding bullion’s appeal.
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However, Atlanta Federal Reserve President Raphael Bostic said inflation could “see-saw” if policymakers cut interest rates too soon.
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The dollar index eased 0.1% against a basket of currencies, increasing bullion’s appeal for other currency holders.
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COMEX gold speculators cut their net long position by 31,228 contracts to 106,288 in the week ended Jan. 9, data showed on Friday.
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Spot silver rose 0.5% to $23.29 per ounce, platinum climbed 0.9% to $913.45, and palladium gained 0.7% to $982.38.
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