Gold Prices Surge in Anticipation of Key Economic Reports

Gold prices increased by over 1% as investors anticipate the U.S. Federal Reserve's January meeting minutes and other economic reports. The market is also closely watching for potential interest rate cuts later in the year amidst easing geopolitical tensions.

Gold prices surged more than 1% from the previous session's one-week low as investors eagerly awaited January's U.S. Federal Reserve meeting minutes, scheduled for release later this week. Spot gold climbed 0.8% to $4,915.90 per ounce by 0914 GMT, after experiencing a 1% increase earlier. Meanwhile, U.S. gold futures for April delivery rose by 0.6% to $4,936.30.

The drop in prices below $4,900 triggered opportunistic buying in the market, according to Bernard Dahdah, an analyst at Natixis. Investors are strategically positioning themselves ahead of the Fed minutes release. On the previous day, bullion prices fell to $4,841.74 per ounce, driven by a stronger U.S. dollar and reduced safe-haven demand amid easing tensions between the U.S. and Iran. Additionally, many Asian markets were closed for the Lunar New Year.

Anticipation is also building for the U.S. Personal Consumption Expenditures report for December, due Friday, as markets look for insights into the Federal Reserve's potential monetary policy decisions this year. The CME's FedWatch Tool suggests the first interest rate cut could occur in June. Gold tends to perform well in low-interest-rate environments. On Tuesday, Chicago Fed President Austan Goolsbee hinted at 'several more' rate cuts given a continued decline in inflation towards the 2% target, while Fed Governor Michael Barr indicated the possibility of further rate reductions down the line. Also, Iran and the U.S. reached a preliminary understanding regarding nuclear talks, although a formal deal has yet to materialize. Dahdah forecasts an average gold price of around $4,850 for this year, barring any geopolitical upheavals.