On Monday, the price of gold saw an increase, reaching over $2,020 per ounce. This increase marked the third day in a row that gold prices went up. The weakening of the dollar played a significant role in this rise. Doubts about what actions the Federal Reserve might take regarding its monetary policy contributed to the dollar’s decline.
In recent updates, data revealed that in January, both the prices consumers pay and the prices producers charge in the US rose more than many people had expected. Additionally, sales in US retail stores fell more quickly than many had predicted for the same month.
As a result of these economic indicators, traders adjusted their expectations regarding when the Federal Reserve would start to lower interest rates. They shifted their predictions from March to June for the first rate cut.
Moreover, expectations for reductions in interest rates throughout the year have also changed. The financial markets now foresee a smaller total reduction in interest rates, anticipating less than a 100 basis point decrease. This expectation is much lower than the initial predictions of a 150 basis point reduction at the start of the year.
Another reason for the rise in gold prices is the increased demand for secure investment options. This surge in demand came as tensions in the Middle East continued, making investors look for safer places to put their money.