Gold Climbs on Fed Rate Cut Hopes, Eyes Fourth Weekly Gain

22 Mar 2024 , 10:21 AM

Gold prices continued to rise on Friday, poised for a fourth weekly increase in five, following the U.S. Federal Reserve’s decision to maintain its interest rate cut projections for the year, which bolstered investor confidence.

Key Points:

• Spot gold: Up by 0.1% at $2,183.93 per ounce as of 0117 GMT, after reaching an all-time high on Thursday. Bullion has seen a 1.3% increase so far this week.
• U.S. gold futures: Also up by 0.1% at $2,186 per ounce.
• The U.S. central bank opted to keep rates unchanged on Wednesday, but policymakers signalled their expectation of reducing them by three-quarters of a percentage point by the end of 2024, despite recent high inflation readings.
• Gold, being a non-interest-bearing asset, typically benefits from lower interest rates as it diminishes the opportunity cost of holding bullion.
• Fed funds futures traders are currently estimating a 74% likelihood of the Fed commencing rate cuts in June, according to the CME Group’s FedWatch Tool.
• Meanwhile, the Bank of England maintained borrowing costs unchanged on Thursday and indicated that the economy was moving towards interest rate reductions.
• Recent data revealed a surprise drop in the number of Americans filing new unemployment claims last week, alongside a significant increase in sales of previously owned homes in February.
• The dollar saw a rebound following the unexpected interest rate cut by the Swiss National Bank, boosting global risk sentiment and reinforcing the attractiveness of the greenback amidst robust U.S. economic growth.
• Spot silver remained flat at $24.77 per ounce, platinum slipped by 0.3% to $904.95, and palladium eased by 0.1% to $1,009.21.