The dollar’s decline to a two-month low further supports this view, with market anticipations shifting towards potential rate cuts. The CME FedWatch tool indicates a 30% likelihood of rate reductions starting as early as March.

Upcoming FOMC Minutes and Market Sentiment

The forthcoming release of minutes from the Federal Reserve’s latest meeting is keenly awaited. These minutes are expected to provide insights into the Fed’s decision-making and could potentially signal a shift towards more dovish policies. This shift, often referred to as the ‘Fed pivot,’ might favor softer U.S. Treasury yields and a weaker dollar, which could bolster gold prices and other risk assets.

Gold’s Outlook Amid Economic Indicators

Despite these developments, there’s a notable divergence between gold prices and real yields. To surpass the $2,000 per ounce mark, gold may require significantly weaker economic data. This is evident from recent trends in the job market and consumer inflation reports, which rekindled hopes of the Fed easing monetary conditions sooner than anticipated.

Investor Focus and SPDR Gold Trust Holdings

Investors are now focusing on the Fed’s minutes for further clarity on the interest rate trajectory. Meanwhile, holdings in the SPDR Gold Trust, the largest gold-backed ETF, rose by 1.49% to 883.43 tonnes, indicating sustained investor interest in gold amid these changing economic conditions.

Short-Term Forecast for Gold Prices

In the short term, gold prices are likely to remain sensitive to shifts in U.S. monetary policy and economic indicators. Given the recent dovish signals from the Federal Reserve and the downward pressure on the U.S. dollar, there’s potential for a modest uptick in gold prices.

However, the extent of this increase may be tempered by the current market divergence between gold prices and real yields. Should the upcoming Federal Reserve minutes confirm a shift towards a more accommodative monetary policy, we could see further support for gold prices.

Overall, the short-term outlook for gold appears cautiously optimistic, with a likelihood of gradual gains, especially if the U.S. economic data continues to signal a slowdown.