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Gold prices rose on Monday as escalating tensions in the Middle East lifted bullion’s safe-haven appeal, while moves were limited as traders awaited the U.S. Federal Reserve chair Jerome Powell’s remarks this week for cues on interest rate trajectory.

Spot gold was up 0.4% at $2,025.99 per ounce by 0403 GMT. U.S. gold futures also rose 0.4% to $2,025.20.

There is enough instability still in the Middle East to keep investors interested in gold as part of a safe-haven play, said Tim Waterer, chief market analyst at KCM Trade.

Investors are wary of heightened geopolitical risks after three U.S. service members were killed after an unmanned aerial drone attack on U.S. forces stationed in northeastern Jordan near the Syrian border.

News on China’s Evergrande being ordered to liquidate is a dent to risk sentiment, which is also keeping gold supported, Waterer said, adding that the immediate upside is capped given the Fed meeting is just around the corner.

Gold is considered a safe store of value amid political and economic turmoil.

Gold holds steady with spotlight on Fed verdict

Markets anticipate the U.S. Fed to keep rates unchanged at its Jan. 30-31 policy meeting, but attention will largely be on the tone struck by Powell.

Data on Friday showed that U.S. prices rose moderately in December, keeping the annual increase in inflation below 3% for a third straight month, which could allow the Fed to start cutting interest rates this year.

Traders are betting on six quarter-point rate cuts for 2024 in the U.S., up from five cuts a week ago, according to LSEG’s interest rate probability app IRPR.

Lower interest rates decrease the opportunity cost of holding bullion.

Spot silver rose 0.5% to $22.91 per ounce, platinum fell 0.2% to $911.18, and palladium dropped 0.3% to $952.33.

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