According to the "Federal Reserve Watch" tool of the Chicago Mercantile Exchange, traders believe that the probability of the bank's March meeting initiating a rate cut cycle is only slightly higher than 40%, compared to over 80% in the previous week. Given that there will be two key data sets for US GDP and PCE later this week, the probability may still change.

UBS explained that its expectations for gold prices are based on the premise of the Federal Reserve's "interest rate cuts starting in May" and "cumulative interest rate cuts of 100 basis points throughout the year", as this path will put pressure on the US dollar and real interest rates, triggering new demand for gold, "especially from gold ETFs."

According to data from the World Gold Council (WGC), gold broke record highs several times in December last year and reached its highest closing price of $2078 per ounce. Analysts believe that besides the potential interest rate path of the Federal Reserve, the impact of the Israeli Palestinian conflict on global commodity volatility is difficult to ignore.

Several experts have stated that the further escalation of the Israeli Palestinian conflict may become the largest "grey rhinoceros" incident in 2024. The latest news shows that a spokesperson for the Yemeni Housa armed forces issued a statement on Monday (January 22) stating that they had launched a missile attack on a US cargo ship, the "Sea Jazz", in the Gulf of Aden.

UBS strategist wrote, "In our view, sustained macro factors and rising geopolitical risks continue to justify holding gold exposure for hedging and diversification purposes."