Gold gains as rate-cut bets hold ground in run-up to inflation test
Gold prices rise as expectations of interest rate cuts remain strong ahead of an impending inflation assessment, buoying investor sentiment.
Gold prices climbed on Monday, bolstered by anticipations of interest rate cuts by the U.S. Federal Reserve amid awaiting inflation data for confirmation on the timing of these potential reductions. Spot gold surged by 0.5% to reach $2,175.68 per ounce by 11:42 a.m. EDT (1542 GMT), while silver saw a 0.2% increase to $24.71. Concurrently, U.S. gold futures advanced by 0.8% to $2,177.10.
Market attention shifted towards upcoming economic indicators, notably the weekly initial jobless claims report scheduled for Thursday and the U.S. core personal consumption expenditure (PCE) price index data set to be released on Friday. However, any reaction to the PCE data may be delayed until the following week due to the Good Friday holiday.
Bart Melek, Head of Commodity Strategies at TD Securities, expressed optimism, projecting a potential surge in gold prices to $2,300 or higher in the second quarter. He attributed this expected rise to discretionary traders and exchange-traded fund investors entering the market once rate cuts are confirmed. However, Melek cautioned that robust economic data could prompt a reversal in gold prices.
Furthermore, the dollar's retreat from last week's gains contributed to gold's appeal by reducing its cost for overseas buyers. Overall, gold's trajectory remains subject to the interplay of economic data, Federal Reserve policy decisions, and market sentiment.
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