Gold Prices Hit Record High Amid Powell’s Rate Cut Hints
Gold Prices Surge to Record High
Gold prices soared to a record high on Thursday, marking their seventh consecutive daily increase. This surge was driven by sluggish U.S. economic data and Federal Reserve Chair Jerome Powell’s hints at potential rate cuts in the near future, should inflation ease.
Continued Rally in Gold Prices
Gold rose by 0.3% to $2,155.42 per ounce, with U.S. gold adding 0.2% to $2,163.10. The bullion continued its record-breaking rally, reaching an all-time high of $2,161.09 earlier in the session, setting the stage for its longest intra-day winning streak since at least November 2021.
Influence of U.S. Data on Gold Movement
Despite marginal weakness in U.S. data, gold witnessed a significant rally. The magnitude of this movement appears to be disproportionately large, possibly influenced by substantial futures buying that began on Friday, according to Marcus Garvey, head of the commodities strategy team at Macquarie.
Impact of Powell’s Remarks on Gold
Gold received a boost after Powell suggested that interest rate cuts were on the horizon “if the economy evolves broadly as expected,” coupled with evidence of decreasing inflation. Lower rates enhance the appeal of non-yielding bullion, leading to increased demand.
Market Response to Powell’s Statements
Powell’s comments, along with softening labor market conditions and falling inflation, resulted in U.S. Treasury yields and the dollar declining. This shift increased the attractiveness of gold as an investment option, making it a preferred choice for many in uncertain financial environments.
Future Projections for Gold Prices
If upcoming labor market or inflation data indicates weakness, the short-term target for gold prices could be $2,300 based on technical levels. However, this surge may be short-lived, with prices eventually correcting and consolidating, as highlighted by Macquarie’s Garvey.
Global Economic Scenario and Gold Investment
Central bank buying is expected to continue amidst geopolitical uncertainty and a slowdown in China, which is likely to keep global growth contained. In such uncertain times, gold is anticipated to remain a safe investment for banks, offering stability and security.
Performance of Other Precious Metals
While spot silver fell by 0.4% to $24.08, platinum dipped by 0.3% to $904.83 per ounce, and palladium slipped by 1.5% to $1,026.80, following a surge of over 12% in the previous session.
