Gold rose on Monday, supported by escalating geopolitical tensions in the Middle East and a weakening dollar, which offset lingering uncertainty over future interest rate moves.
Gaza's health ministry said at least 35 Palestinians were killed and dozens more injured in an Israeli rocket attack on a displaced persons camp in Rafah on Sunday. As such, the geopolitical tensions in the region were in the spotlight for traders and investors.
The XAU/USD was up 0.45% at 2,344.59 over the past 24 hours, while June US gold futures were up 0.49% at $2,345.85.
The dollar is trading in a tight range ahead of speeches from Fed members and the release of preliminary US first-quarter GDP data, RTT News reports.
This week's inflation data from the US, Europe, Japan, and Australia is expected to shed more light on the outlook for global interest rates, while May consumer price data from the Eurozone could provide clues on the European Central Bank's (ECB) future actions.
At the same time, experts suggest that gold could be supported in the long term by rising central bank demand. However, it is expected that lower Fed rates and a hawkish stance from officials could put selling pressure on the XAU/USD, making gold less attractive as a savings vehicle as interest rates rise.
At the same time, analysts at UBS raised their gold price forecast to $2,600 by the end of 2024, while analysts at Citi expect gold to reach $3,000 per troy ounce in the next six to 18 months.
Further reading: USD/JPY pair approaches top of rising wedge