Gold prices hit another record high on Thursday. At the end of the U.S. trading session, spot gold rose by more than $10 in the short term, setting a new all-time high of $2,236 per ounce. Gold futures trading volume surged, continuing the trend caused by bets on interest rate cuts by the Federal Reserve and geopolitical tensions. A weeks-long rally fueled by heightened tensions saw the index rise about 9% in March, its best monthly performance since July 2020.
Despite the expected shift in Federal Reserve policy in favor of gold, gold prices have fluctuated wildly over the past month, lacking a clear news trigger to justify such gains. It is worth noting that when gold surged to a new all-time high overnight, the two-year U.S. Treasury yield rose five basis points to 4.62%, and the U.S. dollar index also continued to rise. However, gold ignored these negative factors and also ignored the Federal Reserve. Trustee Waller's hawkish remarks earlier.
Daniel Ghali, commodity strategist at TD Securities, said traders were "positioning ahead of the Easter holiday and (increasing) activity ahead of month-end and quarter-end," boosting gold prices. Ghali added that if the market starts to price in deeper rate cuts in the Fed's rate-cutting cycle, gold could rise further and could potentially "hold these highs, but we do see signs of exhaustion in the near term."
Everett Millman, chief market analyst at Gainesville Coins, said another reason for the rise in gold prices is that "global geopolitical tensions remain tense," which may prompt investors to buy gold as a neutral reserve asset.
UBS analysts said: "Questions remain about the near-term direction of gold prices as headwinds such as rising interest rates, low stock market volatility and a stronger U.S. dollar failed to disrupt gold's rebound."
“Rightly or wrongly, market expectations for a rate cut from the Fed in June are likely to remain unchanged unless inflation continues to rise and the labor market is a major factor in the increase,” said Chris Larkin of Morgan Stanley E*Trade ) said.
Major U.S. markets will be closed on Friday for Good Friday, but that won't stop investors from focusing on the week's most important economic events.
PCE data, a key U.S. inflation gauge, will be released on Friday, which will test gold's gains this week. Economists expect PCE to accelerate its rise in February, rising 0.4% from January and 2.5% from the same period last year. Higher gasoline prices are partly to blame, but even excluding food and energy, the inflation measure is expected to remain elevated. Meanwhile, consumer spending is expected to pick up in February, driven by a solid job market and rising incomes.
It is against this background that Federal Reserve Chairman Powell will answer questions about the U.S. economy and interest rate trends at 11:30 pm Beijing time on Friday. Last week, he said the Fed was ready to take action if necessary to support the job market. No one is sure what he will say, but based on his recent comments and those from Fed Governor Waller yesterday, one thing is clear: The Fed will likely cut interest rates at some point this year, it just isn't in a rush to do so.
Article forwarded from: Golden Ten Data
