Key Points:
Gold prices hover near record highs, with the market anticipating another U.S. rate cut.
The Fed's 50-basis-point rate cut last week fuels bullish sentiment for gold.
Market focus shifts to Fed Chair Jerome Powell's upcoming remarks.
U.S. jobless claims data and inflation figures expected to provide further rate cues.
Gold up 29% in 2024, driven by global monetary easing and geopolitical tensions.
Gold Near Record Highs
Source: Tradingview
Gold prices remained steady on Thursday, trading near record levels amid growing expectations of another U.S. interest rate cut by the Federal Reserve later this year. As of 0334 GMT, spot gold was priced at $2,661.25 per ounce, just shy of Wednesday's all-time high of $2,670.43. Meanwhile, U.S. gold futures were holding steady at $2,684.50 per ounce.
Tim Waterer, chief market analyst at KCM Trade, noted that while a slight recovery in the U.S. dollar has limited gold's gains, continued speculation about aggressive rate cuts by the Fed keeps the outlook for gold positive. Waterer emphasized that the risk in the gold market remains to the upside, particularly as markets anticipate further monetary easing before year-end.
Impact of U.S. Federal Reserve Rate Cuts:
Last week, the Federal Reserve slashed interest rates by 50 basis points, providing a significant boost to gold prices. Traders currently see a 62% chance of an additional half-percentage-point rate reduction in November. The potential for lower rates continues to support demand for bullion, which is viewed as a hedge against economic instability and inflation.
Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, making it an attractive investment during periods of economic uncertainty and political upheaval.
Fed Officials’ Remarks in Focus:
Investors are now eagerly awaiting remarks from Federal Reserve Chair Jerome Powell, who is set to speak at a conference on Thursday. Other prominent Fed officials, including New York Fed President John Williams and Fed Vice Chair Michael Barr, are also scheduled to address the market. Their insights could provide crucial information on the Fed’s future rate decisions.
Additionally, U.S. jobless claims data (expected on Thursday) and the core personal consumption expenditure (PCE) index (due Friday) are key economic indicators that will be closely monitored for signs of inflationary pressures and further rate cues.
Gold’s 2024 Performance and Future Outlook:
Source: Tradingeconomics
So far in 2024, gold prices have surged nearly 29%, driven largely by monetary easing policies from major global banks, as well as ongoing geopolitical tensions. The consistent rise in gold prices reflects investor demand for safe-haven assets amid economic and political uncertainties.
Analysts like Nicholas Frappell, global head of institutional markets at ABC Refinery, have noted that gold is currently fluctuating within a range of $2,610 to $2,690. He added that unless upcoming U.S. economic data—such as PCE inflation or labor figures—exceed expectations, gold's upward trajectory is likely to continue.
Other Precious Metals:
Source: Tradingeconomics
Spot silver remained stable at $31.85 per ounce.
Platinum saw a 0.8% rise to $995.90 per ounce.
Palladium advanced 1.2%, trading at $1,048.75 per ounce.
Outlook Ahead:
As global markets await further signals from the Federal Reserve and key economic data, gold prices are expected to remain supported by ongoing speculation about rate cuts and geopolitical risks. Fed Chair Jerome Powell’s upcoming speech, alongside U.S. labor and inflation figures, will likely shape the future direction of both gold and broader financial markets.
Gold’s current near-record highs are emblematic of the broader uncertainty gripping global economies. Investors are poised to react to forthcoming developments, particularly as they look for clues on the Fed’s next steps and their potential impact on safe-haven assets like gold.
