XAU/USD loses ground below $2,040, US GDP data eyed

• Gold price holds below the mid-$2,000s amid a stronger US Dollar. 
• The Federal Reserve (Fed) officials warned patience is needed before beginning to cut rates.
• The ongoing Middle East geopolitical tensions might boost safe-haven flows and benefit the gold price. 

Gold price (XAU/USD) trades in negative territory during the early Asian trading hours on Monday. However, the uncertainties surrounding the Federal Reserve’s (Fed) interest rate might lift the yellow metal ahead of the Core Personal Consumption Expenditures Price Index (Core CPI) on Thursday. At press time, gold price is trading at $2,034, losing 0.13% on the day. 

The stronger-than-expected US inflation data in recent weeks has triggered market expectations of delaying the interest rate cuts. Last week, the Fed governor Christopher Waller said that Fed officials are in no rush to implement interest rate cuts. Investors expect that the US may not cut rates until June. That would far surpass previous expectations of March cuts. Traders are now pricing in the first rate cuts starting in June and the Fed’s most recent guidance pointed to three cuts this year.  

The Houthis continue to attack commercial ships in the Red Sea and strengthen their weapons stockpile in Yemen, even though the US has carried out strikes on the group in recent weeks. The rising geopolitical tensions in the Middle East could boost the gold price as it’s perceived as a traditional safe-haven asset. 

Looking ahead, gold traders will monitor the US Gross Domestic Product Annualized for the fourth quarter (Q4), due on Wednesday, and the  Core Personal Consumption Expenditures Price Index (Core PCE) on Thursday. These data could give a clear direction to the gold price.