Gold price is aiming to reclaim weekly high as bets supporting Fed rate cuts deepen.

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• Gold price is aiming to reclaim weekly high as bets supporting Fed rate cuts deepen.
• Fears of stubborn US inflation have faded after a surprisingly soft PPI report.
• Deepening Middle East tensions have improved the appeal for safe-haven assets.

Gold price (XAU/USD) continues to enjoy decent demand on Monday’s European session amid multiple tailwinds. The precious metal is attracting investments as market participants seem more convinced about the Federal Reserve (Fed) reducing borrowing costs from March after the release of the surprisingly soft Producer Price Index (PPI) numbers for December.

Investors expect that a decline in the prices of goods and services at their factory gates will eventually result in easing inflation pressures further. This also suggests that inflation is progressively declining towards the 2% target.

Meanwhile, the appeal for Gold has also improved due to escalating geopolitical tensions in the Middle East. US and the UK military have launched airstrikes targeting Houthis in retaliation for attacking commercial shipments of Oil in the Red Sea. This has deepened fears of an escalating war in Gaza amid the potential participation of Iran in the Israel-Hamas war.

Gold price is an inch far from recapturing a weekly high of $2,063 amid persistent bets that the Fed will cut interest rates in March. The precious metal delivered a sharp recovery after discovering strong buying interest while re-testing the crucial support around $2,040. The 14-period Relative Strength Index (RSI) has shifted into the upper range of 60.00-80.00, which indicates that a bullish momentum is active.

The broader appeal for Gold is also bullish as short-to-long-term daily Exponential Moving Averages (EMAs) are sloping higher. The 14-period RSI, on the daily timeframe, is aiming to climb above 60.00.

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