Gold rises to its highest level in more than a week
Gold prices rose significantly at the start of trading on Monday, with the yellow metal climbing above $5,040 an ounce, its highest level in more than a week.
This rise was supported by increased caution among investors ahead of the release of important US economic data that could have a direct impact on the Federal Reserve's monetary policy.
Despite this rise, prices later fell back to around $5,000 per ounce amid profit-taking and cautious anticipation of the upcoming data.
US economic data under the microscope
Investors are awaiting a series of key economic indicators this week, most notably the January jobs report, which is scheduled for release on Wednesday after being postponed since last Friday.
Expectations point to possible signs of a stable labor market, which could influence the Federal Reserve's interest rate decisions in the coming period.
Markets are also awaiting the release of US inflation data on Friday, which will play a decisive role in determining the direction of gold in the coming weeks, as the yellow metal tends to benefit from any signs supporting a slowdown in monetary tightening.
Support from Japanese policy and a weak yen
Gold prices received additional support from political developments in Japan, following the landslide victory of current Prime Minister Sanae Takaichi. This victory has reinforced expectations of continued accommodative fiscal policy, increasing downward pressure on the Japanese yen and making gold more attractive as a safe haven and hedge against currency volatility.
Strong demand from central banks
Institutional demand for gold remained a supportive factor for prices, with the Chinese central bank continuing its purchases of the precious metal for the 15th consecutive month in January, reflecting a growing trend among central banks to diversify their reserves away from the dollar.
Geopolitical tensions boost gold's appeal
On the geopolitical front, the latest round of talks between the US and Iran concluded last Friday with an agreement to continue discussions this week.
However, risks remain, with Iran threatening to target multiple sites in the Middle East if former US President Donald Trump orders an attack.
Tehran also confirmed during the talks its refusal to halt uranium enrichment, despite signs from both sides of a shared desire to continue diplomatic efforts.
These developments remain an additional source of support for gold as a safe haven in times of tension.
Ultimately, gold remains caught between supportive factors, such as strong demand from central banks and geopolitical tensions, and bearish factors, such as the strength of the dollar and anticipation of US economic data that could reshape interest rate expectations.
Price movements in the coming days will depend on what economic data reveals and developments in the global political landscape.
