Gold Price Forecast: XAU/USD gains momentum above $2,000 amid the geopolitical risks, Fed rate decision eyed

• Gold Price surges above the $2,000 mark for the first time since May 2023.
• US Core PCE came in at 3.7% YoY in September vs. 3.8% prior, matching consensus.
• The escalating geopolitical risks might benefit the safe-haven asset like gold.
• Traders await the US CB Consumer Confidence ahead of the Fed policy meeting on Wednesday.

Gold Price (XAU/USD) gains momentum to the $2,003 psychological mark during the early Asian trading hours on Monday. The yellow metal rose above the $2,000 psychological round mark for the first time since May as the elevated geopolitical tensions boosted the safe-haven flows demand.

Meanwhile, the US Dollar Index (DXY), the value of the USD relative to a basket of global currencies, hovers around 106.60 after retracing from 106.90. The upbeat US economic data on Friday fails to boost the US Dollar (USD) and lends support to the US Dollar-denominated Gold price

The US Bureau of Economic Analysis revealed on Friday that the Fed’s preferred gauge for inflation, Core Personal Consumption Expenditures Price Index (PCE), came in at 3.7% YoY in September from the previous reading of 3.8%, matching the market expectation. On a monthly basis, the figure rose to 0.3% versus 0.1% prior and in line with the market consensus. Meanwhile, September's headline PCE Price Index arrived at 3.4% YoY versus the expected 3.4%.

The Federal Reserve (Fed) is expected to leave rates unchanged at the end of its two-day meeting on Wednesday. However, the higher for longer rate narratives in the US might cap the upside of gold price. It's worth noting that rising interest rates raise the opportunity cost of investing in non-yielding assets, implying a negative outlook for precious metals.

Rising geopolitical risks triggered risk aversion and benefits to safe-haven assets like gold. On Thursday, the US carried out airstrikes targeting two facilities related to Iranian-backed militias in eastern Syria, following a series of drone and rocket attacks against US forces in the region. That being said, risk sentiment offset headwinds from the USD dynamic and bond markets.

Looking ahead, gold traders await US CB Consumer Confidence on Tuesday. On Wednesday, the Fed policy meeting will be announced and the market is expecting the central bank to maintain the rate unchanged. These events could give a clear direction to the gold price.