Gold prices rose during trading on Monday, continuing to recover from their lowest levels in a month, as a slight decline in the US dollar and escalating tensions in the Middle East led to a slight increase in the precious metal as a safe haven in light of the scarcity of economic data today, but the rises are still limited amid fears of higher US interest rates for a longer period, which kept prices in a limited range.
Recent geopolitical developments could also have an impact on safe haven movements today, as a UK-registered cargo ship reported being attacked in the Bab al-Mandab Strait off Yemen on Sunday, and that its crew abandoned ship off Yemen after an explosion.
The minutes of the FOMC meeting next Wednesday will be on the lookout for greater signals about the Fed's policy outlook, for more clues about when the Fed could start cutting interest rates, with the likelihood that any hawkish stance from policymakers will lead to renewed fears that interest rates may be kept high for longer, and this may not be good news for gold.
A rise in long-term interest rates will be negative for gold, since it increases the opportunity cost of investing in the yellow metal.
