Gold Surges as Investors Bet on Early Fed Rate Cut

11 Mar 2024 , 09:55 AM

As expectations for a rate drop in June were reinforced by comments made by Federal Reserve Chair Jerome Powell last week and U.S. economic statistics, gold prices increased on Monday and remained close to a record high reached in the previous session.

Spot gold was up 0.2% to $2,181.27 per ounce, not too far off the record high of $2,194.99 reached on Friday.

US gold futures increased by 0.1% to $2,188.20.

According to figures released last Friday, non-farm payrolls climbed by 275,000 jobs last month, exceeding economists’ projections of 200,000 job increases. The number of new employment created in January was cut downward from 353,000 to 229,000.

According to the report, the jobless rate increased to 3.9% in February following three consecutive months of 3.7%.

Powell seemed more certain last week in his statement before Congress about lowering interest rates in the upcoming months.

Tuesday’s consumer price inflation data for February is scheduled to be the next significant economic release in the United States, providing new insights into likely Fed policies.

According to LSEG’s interest rate likelihood tool, traders are pricing in three to four quarter-point (25 bps) U.S. rate decreases, with a 75% chance for the first in June.

In the week ending March 5, COMEX gold speculators increased their net long positions by 63,018 contracts to 131,060, according to figures released on Friday.

The largest exchange-traded fund backed by gold in the world, SPDR Gold Trust, reported that its holdings decreased by 0.18% to 815.13 tonnes on Friday from 816.57 tonnes on Thursday.

Other currency holders saw a decrease in the cost of bullion as the dollar fell 0.1% vs a basket of currencies.

Palladium increased by 0.6% to $1,025.55, spot platinum increased by 0.1% to $913.59 per ounce, and spot silver increased by 0.2% to $24.35.

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