Gold prices traded higher yesterday up more than 0.70% due to increased tension in the Middle East geopolitical conflict.
In addition, the US dollar currency jumped for a moment and fell back to a stable level just like yesterday's opening.
Now, XAU/USD is trading at $2,031.39 which is down by 0.09% in the Asian trading session compared to yesterday's low opening of around $2,017.92.
Investors remain cautious ahead of the monetary policy decision by the US Federal Reserve (Fed) on Thursday morning. The US dollar currency has experienced a decline since last weekend, hovering around 103.42 points due to the recent drop in US Treasury bond yields.
Looking at the situation in the Middle East, the drone attack on the US military in Jordan that killed 3 soldiers and injured 34 others has increased the anger from the White House.
Based on the statement of the US Secretary of Defense, Lloyd Austin said that he and Joe Biden will not tolerate attacks on the US military and they will take appropriate action to defend the US military.
Meanwhile, the 10-year US Treasury bond yield fell by six basis points to 4.07% and gave the gold price an advantage to rise.
The Fed meeting for January is expected to be unchanged and maintain a more neutral stance unlike last December in the speech of its president, Jerome Powell.
According to the CME FedWatch report, investors do not expect a rate cut until the May meeting with a 100% chance of 25 basis points and the 0.50% cut could change if the Fed's decision misses the mark.
