Gold prices rised on Wednesday, supported by a decline in U.S. Treasury yields, as investors await key economic data that could impact the Federal Reserve’s interest rate strategy.
Spot gold rose 0.3% to $2,667.97 per ounce, approaching last month’s record high. U.S. gold futures also saw a slight uptick of 0.2% to $2,683.80. The continuous drop in 10-year Treasury yields has enhanced the appeal of gold as a non-yielding asset.
Impact of Monetary Policy
Soni Kumari, an ANZ commodity strategist, noted, “The easing of U.S. monetary policy is a significant driver for gold prices, bolstering investment demand.” She also highlighted that ongoing uncertainties related to U.S. elections and global geopolitical tensions are likely to further support gold prices.
The market is anticipating U.S. retail sales, industrial production, and jobless claims data due Thursday, which may provide additional insights into the Fed’s easing cycle.
Expectations for Rate Cuts
Current market predictions suggest a 97.2% probability of a 25 basis-point rate cut at the Fed’s November meeting. Mary Daly, president of the San Francisco Fed, indicated that the central bank is positioned for further cuts this year if the economic data aligns with expectations. Meanwhile, Atlanta Fed President Raphael Bostic forecasted only one additional 25-bp cut for this year.
Geopolitical Developments
In related news, Israeli Prime Minister Benjamin Netanyahu stated he informed French President Emmanuel Macron that he would not support a ceasefire deal that fails to prevent Hezbollah from rearming. This geopolitical tension contributed to a 3% drop in the energy index, marking the largest decline since early October 2023, as crude prices fell due to reduced demand forecasts.
Price Forecasts
At the London Bullion Market Association’s annual gathering, attendees predicted gold prices could reach $2,941 over the next year, with silver expected to rise to $45 per ounce. Spot silver rose 0.3% to $31.56, while platinum and palladium also saw gains, reaching $990.49 and $1,011.47, respectively.
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