Geopolitical Tensions Buoyed Bullion

Gold is little changed in the Asia-Pac session, after closing 0.4% higher at $2027.19 on Monday.

• Increased geopolitical tensions buoyed bullion. Vessel attacks in the Red Sea are increasing. Yemen’s Iranian-backed Houthi rebels have claimed responsibility for attacks on two ships on December 18 - the Swan Atlantic and MSC Clara - using naval drones, according to Alarabiya news.
• The precious metal’s gain came despite Fedspeak continuing to push back against expectations for early and significant rate cuts next year.
• Fed Mester told the FT that the market had gotten “a little bit ahead” by pencilling in early interest rate cuts, “the next phase is … about how long do we need monetary policy to remain restrictive in order to be assured that inflation is on that sustainable and timely path back to 2%”. Meanwhile, Fed Goolsbee told CNBC he was confused with the market’s reaction to the Fed’s policy update last week.
• However, the cheapening in US Treasury benchmarks was small, with yields finishing flat to 4bps higher.