Gold prices (XAU/USD) climbed to nearly $3,445 during early trading in the Asian session on Monday, reaching a more than one-month high as rising geopolitical tensions in the Middle East and growing expectations of a U.S. Federal Reserve rate cut bolstered demand for the safe-haven asset.
Investors appeared to shrug off stronger-than-expected U.S. economic data released Friday. According to the University of Michigan, the Consumer Sentiment Index surged to 60.5 in June, up from 52.2 previously and well above the market forecast of 53.5. Despite the upbeat data, market focus shifted to global tensions and monetary policy signals.
Renewed fears of conflict following an Israeli military strike on Iran have reinforced demand for gold. Iranian authorities warned they would “respond firmly to any adventurism” from Israel, heightening concerns over regional stability.
“Israel knocking out Iranian targets is causing a little bit of geopolitical scare in the market. Prices will stay elevated in anticipation of what is to come, the retaliation by Iran,” said Daniel Pavilonis, senior market strategist at RJO Futures.
Meanwhile, attention turns to the Federal Reserve’s policy meeting on Wednesday, where officials are widely expected to maintain the benchmark interest rate in the 4.25%–4.50% range. However, market participants are increasingly betting on a quarter-point rate cut by September—an earlier timeline than previously anticipated. Just last week, the consensus pointed to December as the likely window for a second rate reduction.
Expectations of lower interest rates typically enhance the appeal of non-yielding assets like gold, further fueling its upward momentum.
