Gold consolidates at all-time high on US Fed rate cut hopes, China data; silver near 3-year high mark

At 10:04 am EDT, spot gold was down 0.3 per cent at $2,291.88 per ounce, after hitting a record high of $2,304.09 earlier in the day. US gold futures declined 0.3 per cent to $2,308.30. Spot silver fell 1.2 per cent to $26.88 per ounce after hitting its highest since June 2021 –nearly a three-year high. Platinum rose 0.2 per cent to $938.60 and palladium gained 1.4 per cent to $1,028.50.

Also Read: Gold, silver prices climb to a new peak after US Fed chair Jerome Powell’s speech. US dollar retreats from 4-month high

Back home, gold prices surged by ₹850 to reach a new peak of ₹70,050 per 10 grams on Thursday driven by robust global cues, according to HDFC Securities. This is the second straight session that precious metal prices have hit all-time high levels. In the previous trade, the precious metal had settled at ₹69,200 per 10 grams. Silver prices also zoomed ₹1,000 to hit record ₹81,700 per kg. 

What’s working for gold prices?

-Fed officials including US central bank chief Jerome Powell on Wednesday continued focusing on the need for more debate and data before interest rates are cut, a move which markets expect to occur in June.

-Governor Powell in his comments yesterday mentioned that the interest rates have peaked for this cycle, however they will still watch the economic numbers and inflation trend before taking any decision. Governor Powell believes that the monetary policy is tight

-Data showed the number of Americans filing new claims for unemployment benefits increased more than expected last week as labor market conditions gradually ease. Focus now shifts to US March non-farm payrolls due on Friday that could shed more light on the timing of the Fed’s first rate cut.

-Strong central bank buying and safe-haven inflows amid growing geopolitical tensions have boosted demand for gold, helping to drive the price up more than 25 per cent since October. Analysts said gold is heavily overbought and needs to correct to blow some of the froth as Fed cuts are priced in.

Also Read: Powell: Fed still sees rate cuts this year; election timing won’t affect decision

-Economic data points from the US are also reported a bit mixed, but no major impact is being seen on the metal prices. US factory order was reported better than expectations, while US JOLTS and Services PMI were reported better than expectations.

-”China’s consistent accumulation of gold reserves for 16 consecutive months, as evidenced by Bloomberg data, has played a significant role in bolstering gold prices,” said Nigel Green, CEO, deVere Group-leading independent financial advisory and asset management organizations.

Also Read: Gold and silver prices Today on 04-04-2024: Check latest rates in your city

-China’s strategy of diversifying its central bank holdings to reduce reliance on the US dollar has led to substantial gold acquisitions. This diversification not only safeguards against currency volatility but also reflects China’s broader ambition to assert economic independence and influence in the global financial landscape. ‘’As China continues to bolster its gold reserves, it exerts upward pressure on gold prices, further fueling the rally,” added Nigel Green.

Where are gold prices headed?

Looking ahead, the trajectory of gold prices remains intricately linked to the evolving macroeconomic landscape and geopolitical developments. While monetary policy decisions and geopolitical conflicts will continue to influence short-term fluctuations, other factors driving predictions of upticks in inflation and China’s gold acquisitions cannot be dismissed, according to experts.

“We see the momentum for gold to continue for the foreseeable future, as investors are reminded of its enduring appeal as a safe haven asset and as US economic rivals continue to move away from the dollar,” said Nigel Green, CEO, deVere Group.

Also Read: Gold rate today: Yellow metal at a record high above ₹69,400; silver price surpasses ₹78,000 level on MCX

Dollar index fell from their recent peak of 105 to 104.20, however US 10Y yields are higher hovering above 4.3 per cent mark. Focus now shifts to comments from several Fed officials who could prepare us for US central bank’s monetary policy path ahead, said analysts.

‘’The nonfarm payrolls data scheduled later this week is very important to watch for as, sticky inflation and strength in the labor market are the two biggest considerations for the Fed in altering interest rates this year,” said Navneet Damani, Senior VP – Commodity Research at Motilal Oswal Financial Services.

On domestic prices, Jateen Trivedi, VP Research Analyst, LKP Securities estimates, ‘’ Gold may experience volatility in the coming days, particularly with data-heavy sessions ahead, including the release of nonfarm payroll and unemployment data on Friday. Strong support is anticipated at 69,400, and a breach below this level could pave the way for a decline towards the 68,500 zone.”

Disclaimer: The views and recommendations above are those of individual analysts, experts, and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 04 Apr 2024, 09:43 PM IST