© Reuters. Picture of pure gold ingots at the Novosibirsk precious metals refining and manufacturing plant in Russia.
By Harshit Verma
(Reuters) – Gold prices are on track for their largest weekly increase in five months, nearing a historic high, as market expectations for a mid-year interest rate cut are solidified after remarks from Federal Reserve Chair Jerome Powell. This comes ahead of the release of important U.S. employment data.
The price of gold remains steady at $2,157.32 per ounce as of 0601 GMT, close to the record high of $2,164.09 reached on Thursday. Meanwhile, U.S. gold futures are flat at $2,164.60.
Nikos Kavalis, managing director at Metals Focus, noted that despite short-term speculative activity driving the recent gold rally, the primary driver is the anticipation of future interest rate cuts. Powell mentioned that the Fed is close to being confident in the decreasing inflation levels, paving the way for rate cuts in the near future.
Market analysts are predicting three to four U.S. rate cuts, with a 75% chance of the first cut happening in June, according to LSEG’s interest rate probability app. Lower interest rates make gold more attractive as a non-yielding asset.
Gold has also been supported by a surge in other asset classes, particularly equities, as investors seek to diversify their risk exposure. This surge in gold prices could impact consumption during the Indian wedding season, but demand from China, a major buyer, is expected to remain strong as a safe-haven asset.
The weakening U.S. dollar, heading for its largest weekly decline of the year, is making gold more affordable for investors holding other currencies. Market attention is now focused on the forthcoming U.S. jobs report due at 1330 GMT.
In addition, spot platinum dropped by 0.3% to $916.48 per ounce, silver remained stable at $24.32, and palladium rose by 0.5% to $1,039.07. All three metals are on track for a weekly gain.