Gold advances amid escalating tensions in the Middle East and Fed policy

• The price of gold registers a strong upward movement as geopolitical tensions worsen.
• Fed policy, the labor market and December manufacturing PMI data will remain in focus.
• The Fed is expected to keep interest rates unchanged for the fourth time in a row.

The price of Gold (XAU/USD) remains bullish as rising geopolitical tensions have enhanced bullion's appeal. The precious metal attracts significant bids as the drone attack on US bases near northeast Jordan has impacted market sentiment. In response, US President Joe Biden has pleaded for retail sales to take place at a time and place of their choosing. Meanwhile, Iran has denied claims of involvement in the drone airstrikes. Additionally, a moderate rise in US core personal consumption expenditure (PCE) data for December has softened the inflation outlook.

This week, investors should prepare for some highly volatile action as the Federal Reserve's (Fed) interest rate decision will be followed by the Institute for Supply Management's (ISM) Manufacturing PMI and payrolls report. non-agricultural (NFP) for December. The Federal Reserve is expected to maintain interest rates in the 5.25-5.50% range, but we will have to be very attentive to new guidance on interest rates. Investors will be looking for signs of whether Fed policymakers remain inclined to keep interest rates tight through June or whether they are likely to signal a bearish decision in March or May.

Daily market movements: The price of Gold remains on the rise as the attractiveness of safe-haven assets improves

• The price of Gold discovers strong buying interest on Monday, as investors rush for safe haven assets due to escalating tensions in the Middle East.
• The precious metal is witnessing significant bets as geopolitical tensions rise following a drone attack on US service members stationed in northeastern Jordan.
• This week, market participants will focus on the Federal Reserve's first monetary policy announcement of 2024, scheduled for Wednesday.
• According to CME's FedWatch tool, investors are fairly confident that interest rates will remain unchanged in the 5.25-5.50% range for the fourth time in a row.
• The focus will be on the outlook for interest rates. Traders see a higher likelihood of the Fed cutting interest rates starting in May as policymakers have reiterated the need to keep interest rates tight for a longer period until they are convinced inflation will come down. to the 2% target in a timely manner.
• The DXY could come under pressure if the Federal Reserve indicates that it could begin its rate cut campaign as early as March.
• The December Core PCE Price Index report, released on Friday, failed to raise expectations for a rate cut starting in March.
• Monthly core CPI rose 0.2%, as expected, while annual core inflation data slowed to 2.9%, versus expectations of 3.0% and the previous reading of 3.2%.
• Federal Reserve policy aside, it will be a volatile week as manufacturing PMI, ADP and official employment data are released.
• But first, market participants will be keeping an eye on US JOLTS job openings data, due out on Tuesday. This will indicate how strong the demand for labor is even though interest rates remain high.

• Technical Analysis: Gold Jumps Near $2,030
  
  

Gold price is approaching the horizontal resistance of the ascending triangle chart pattern drawn from the January 19 high at $2,039.50 on the two-hour time frame. The upward boundary of this pattern is drawn from the January 17 low, near $2,002. The pattern has a bullish bias, suggesting a breakout to the upside after its completion.
On a daily basis, the precious metal continues to struggle to stay above the 20-day EMA, which is around $2,030.