Top Stories This Week: Gold Rises on Middle East Tensions, Uranium Price Hits Triple Digits

The second week of 2024 was initially fairly quiet for gold, but it made some big moves later on.

The yellow metal dipped as low as US$2,014.57 per ounce on Thursday (January 11), but jumped back up to the US$2,055 level on Friday (January 12) morning. It was at US$2,047.52 by Friday at 1:50 p.m. EST.

Gold's Thursday decline came on the back of the latest US inflation data. Released that day, it shows the consumer price index (CPI) was up 3.4 percent year-on-year in December, and 0.3 percent from the previous month.

Both numbers came in higher than analysts' estimates, although not by much. Core CPI, which excludes the volatile food and energy segments, was up 3.9 percent from the previous year and 0.3 percent from November.

The US Federal Reserve's rate hikes have been aimed at curbing inflation, and after 11 increases since March 2022, the broad consensus is that the central bank has reached the top. When it starts to cut rates and how quickly it does so will be key questions in 2024 — Fed officials are projecting three rate cuts, but market watchers are anticipating six.

CME Group's (NASDAQ:CME) FedWatch tool currently shows a 63.3 percent probability of a cut to 5 to 5.25 percent at the central bank's March meeting. The Fed's next meeting runs from January 30 to 31.

Although the CPI data had a dampening effect on gold on Thursday, heightened tensions in the Middle East had the opposite impact on Friday. The precious metal gained ground as US and UK naval forces launched airstrikes in Yemen — they were responding to repeated attacks on commercial ships in the Red Sea led by Iran-backed Houthi rebels. The Houthis support Hamas, and have claimed they are targeting vessels with links to Israel.

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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

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