Gold prices are still maintaining a prolonged price movement amid the escalating conflict between the United States and Iran, as market players evaluate important data to be published tonight (Friday).
At 8.20 am, gold prices were at $4,995, down 0.04% since it opened in early trading on Friday in the Asian session.
Market attention is now focused on the preliminary reading of the US fourth-quarter GDP, PCE price index and PMI report which will be important indicators of the next direction of monetary policy. These data are expected to influence market expectations for interest rate moves by the Fed.
US President Donald Trump stated that Iran has about 10 to 15 days to reach an agreement regarding its nuclear program.
He warned that failure to reach an agreement could have serious implications, and stressed that the US will ensure that an agreement is reached at any cost.
At the same time, data from FlightRadar24 showed a significant increase in the movement of US military aircraft including air tankers, surveillance aircraft and drones to several bases in the Middle East and Europe such as Qatar, Jordan, Crete and Spain.
This development added to market concerns about the risk of greater conflict.
If tensions continue to escalate, demand for safe assets such as gold could potentially increase in the near term. Gold is usually an investor's choice when geopolitical uncertainty and global risks increase.
At the same time, US economic data showed that the economy is still stable. This situation gives the Fed room to keep interest rates at current levels without immediate pressure to ease policy.
Minneapolis Fed President Neel Kashkari said the labor market remains resilient and the central bank is close to achieving its maximum employment mandate and price stability.
San Francisco Fed President Mary Daly also stressed that monetary policy is currently in an appropriate position.
The establishment of high interest rates for a longer period usually puts pressure on gold because the precious metal does not offer interest returns. Therefore, the direction of gold in the near future depends on the balance between geopolitical risks and US monetary policy expectations.
