2024.01.1209:06:00UTC+00Gold Gains On Heightened Geopolitical Tensions

Gold prices rose on Friday as increased geopolitical tensions outweighed reduced chances of an early Fed rate cut.

Spot gold rose half a percent to $2,038.88 per ounce, while U.S. gold futures traded up 1.20 percent at $2,043.35.

Regional tensions spiked in the Middle East after the United States and the United Kingdom launched air strikes against military targets in Houthi-controlled areas of Yemen used by the rebel militants to attack commercial vessels in one of the world's most vital waterways.

Investors were also reacting to mixed comments from Federal Reserve officials on the possibility of rate cuts this year.

Richmond Fed President Thomas Barkin said that Thursday's U.S. inflation report did little to clarify the path of inflation.

Chicago Fed President Austan Goolsbee noted that it is premature to make definitive decisions about rate adjustments at this juncture.

Cleveland Fed President Loretta Mester also said March is probably too early for a rate cut.

Futures, however, currently price in the chances of an interest rate cut in March at a 73 percent probability.

Elsewhere, European Central Bank (ECB) President Christine Lagarde said on Thursday that the 'hardest and worst bit' regarding inflation was likely over and that the central bank will start lowering rates once inflation heads back to the 2 percent goal.