The yellow metal managed to touch the $3,450 support level at the beginning of the week due to the escalating Middle East tensions between Israel-Iran and the increase in bets of a Federal Reserve (Fed) rate cut.
At 9.10 am, the price of gold was at $3,440.24, up 0.23% since it opened in early trading on Monday in the Asian session.
Investors ignored the optimistic US economic data released last Friday when the University of Michigan showed that the Consumer Sentiment Index rose to 60.5 for June compared to 52.2 previously.
In addition, the geopolitical concerns that are heating up in the Middle East following the Israeli attack on Iran continue to support the price of gold. Iranian officials have underlined that they will react firmly to any movement from the Israeli military.
Daniel Pavilonis, Senior Market Strategist at RJO Futures, said Israel's actions targeting Iran have sparked geopolitical concerns in the market and gold prices are expected to remain high on expectations of Iranian retaliation.
The Fed is expected to leave its policy rate in a range of 4.25%-4.50% at its June meeting on Wednesday. However, traders are now expecting a quarter-point rate cut by September.
Before last week's US inflation data, traders had expected the Fed to wait until December for a second rate cut. The heightened expectations of a Fed rate cut boosted yielding assets such as gold.
