Gold trading opened relatively flat in the early Asian session this morning. However, gold prices were seen rising at the end of last week due to lackluster US Producer Price Index (PPI) data and rising geopolitical tensions in the Middle East.
Gold traded at $2,045 with a decrease of 0.01% compared to last week.
On Friday, the Producer Price Index (PPI) for December rose 0.1% year-on-year from November's 0.8% and it was still below market expectations of 1.3%.
As for the Core PPI data, it increased by 1.8% in December from the previous reading of 2.0% and was below the market consensus of 1.9%. The report was unchanged for the third consecutive month.
The data from the PPI report showed some signs of deflation that could increase market confidence regarding the expected interest rate cut by the Federal Reserve (Fed) in March.
Investors set targets in 74.2% in the later decline compared to before which was 70%. This situation will continue to put pressure on the US dollar currency and apply advantages to gold prices.
In addition, the recent increase in the price of gold is also due to the occurrence of increasing political tension. The United States and the United Kingdom acted to launch an attack against the Houthi group in Yemen last week.
The attack was a response to their actions in attacking commercial ships sailing in the Red Sea. Joe Biden and his allies warned the Iran-backed group that they would suffer the consequences.
Today, no US economic data is published due to the bank holiday in conjunction with Martin L. King's Birthday celebration and so risk sentiment will remain the main driver of gold price movements.
This week, markets will continue to pay attention to the New York Empire State Manufacturing Index on Tuesday, Retail Sales on Wednesday and the Michigan Consumer Sentiment Index report over the weekend, Friday.
