Gold Prices Close to Breaking Above $2,050 on US Rate Hopes
Gold Prices Steady in Asian Trade: Gold prices steadied in Asian trade on Friday and were close to breaking above key levels as overnight data spurred hopes that easing inflation will spur interest rate cuts from the Federal Reserve.
Spot Prices Approaching Key Levels: Spot prices of the yellow metal were now close to breaking above a $2,000 to $2,050 an ounce trading range established through most of 2024.
Resilience in the Dollar: Resilience in the dollar limited any further gains in gold, with the greenback rising in overnight trade and retaining most of its strength in the Asian session.
Gold and Silver Performance: Gold steadied at $2,043.64 an ounce, while silver expiring in April fell 0.1% to $2,051.95 an ounce by 00:24 ET (05:24 GMT). Both instruments surged between 0.4% and 0.6% on Thursday, also benefiting from month-end buying after a largely muted performance through February.
Other Precious Metals: Other precious metals also advanced on Friday. Platinum rose 0.3% to $885.45 an ounce, while palladium rose 0.3% to $22.953 an ounce.
PCE Data and Rate Cuts: PCE data, the Fed’s preferred inflation gauge, eased as expected in January, data showed on Thursday. The reading spurred hopes that inflation will fall in the coming months and give the Fed enough impetus to cut rates in June.
Traders’ Expectations: But the market showed traders only slightly increased their expectations for a rate cut in June, while bets on a hold remained steady.
Fed Officials’ Warnings: A slew of Fed officials also warned that sticky inflation will see the central bank in no hurry to begin loosening policy, indicating that any future upside prints in inflation were likely to diminish the prospect of a June cut.
Future Rate Expectations: Inflation prints for February and March are now largely expected to determine the trajectory of precious metal prices in the coming months, given that they have moved in line with U.S. rate expectations over the past two years.
Impact of Rising Rates: Rising rates battered gold over the past two years as the opportunity cost of investing in the yellow metal rose, weighing on most other metals.
Copper Performance: Among industrial metals, copper prices fell slightly on Friday following mixed economic signals from top importer China. Copper expiring in May edged lower to $3.8453 a pound.
China’s Economic Signals: Official purchasing managers index data from China showed the country’s PMI shrank for a fifth straight month in February, a trend that bodes poorly for copper demand.
Lunar New Year and Surveys: However, copper was supported by the Lunar New Year holiday, while a private survey showed expansion in the Chinese economy.
