FX.co ★ Gold Firms on US Rate Cut Bets

Gold held above $5,040 per ounce on Wednesday, hovering near a nearly two-week high, underpinned by expectations of a more dovish Federal Reserve. The metal’s strength followed softer US data, with December retail sales missing forecasts and pointing to a cooling in consumer spending, thereby heightening concerns over slowing economic growth. In response, markets have now priced in a higher likelihood of three Fed rate cuts this year, up from two just a week earlier. Investors are closely watching upcoming US labor market and inflation releases for additional insight into the economy’s direction and the Fed’s next policy steps. Further support for gold came from sustained central bank buying, with the PBoC extending its gold purchases for a 15th consecutive month in January. Geopolitical tensions also continued to bolster prices, as traders monitored ongoing strains between the US and Iran, despite last week’s initially positive talks.