Gold Prices Hold Steady Supported by Lower U.S. Treasury Yields

27 Mar 2024 , 10:06 AM

Gold prices maintained their stability on Wednesday, buoyed by a decrease in U.S. Treasury yields. Despite trading within a narrow range, bullion remained resilient as investors awaited further clarity on the Federal Reserve’s monetary policy stance.

Market Dynamics: Spot gold remained steady at $2,178.31 per ounce, marking two consecutive sessions of gains. Conversely, U.S. gold futures experienced a marginal 0.1% decline, settling at $2,173.70 per ounce. The retreat in U.S. bond yields on Tuesday, following robust demand at an auction of $67 billion in five-year notes, provided support to gold prices.

Fed Policy and Market Expectations: Investors are eagerly anticipating the release of the U.S. core Personal Consumption Expenditure (PCE) price index data scheduled for Friday, which will offer insights into the potential timing of interest rate cuts by the Federal Reserve. Despite recent reports indicating stronger-than-expected orders for durable goods in February, sentiments remain focused on the Fed’s monetary policy outlook. Market participants are currently pricing in a 72% probability of rate cuts commencing in June, according to the CME Group’s FedWatch Tool.

ETF Holdings and Import Trends: The SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, reported a 0.62% decline in holdings to 830.15 tons in the previous session, signalling a shift in investor sentiment. Conversely, data revealed a significant decrease of approximately 48% in China’s net gold imports via Hong Kong in February, reaching the lowest level since November.

Precious Metals Performance: Spot silver maintained stability at $24.42 per ounce, while platinum experienced a slight 0.1% increase to $903.70. On the other hand, palladium witnessed a marginal 0.3% decline, settling at $990.98 per ounce.