The price of gold jumped 0.7%, which was due to the escalation of tensions in the Middle East and the correction of investors' positions ahead of the Fed meeting on Wednesday.
Investors feared increased geopolitical risks after three U.S. military personnel were killed in an unmanned aerial drone attack on American troops near the Syrian border. Demand for precious metals also increased after reports that the court ruled on the liquidation of the real estate giant China Evergrande Group.
In addition, market participants are preparing for the Fed meeting. Economists said the Fed is likely to keep current policy settings in place, but Chairman Powell's comments will be scrutinized to assess whether the U.S. central bank is ready to start cutting interest rates. Overall, the latest US data has strengthened bets that Fed policymakers are signaling the need to be patient and see signs of sustained easing in inflation before approving interest rate cuts. According to the CME FedWatch Tool, markets see a 47.7% probability of a 25 basis point rate cut at the Fed meeting in March and a 89.0% probability of a rate cut in May. In 2024, futures traders now expect five rate cuts of 25 bps, although two weeks ago they expected six cuts.