Gold surges on growing bets of Fed rate cuts by mid-year

4 Mar 2024 , 10:08 AM

Monday saw gold prices stay close to a two-month high after the dollar and Treasury yields dropped last week due to weaker U.S. economic data that increased expectations of a June interest rate cut by the Federal Reserve. 

Spot gold was down 0.2% at $2,080.09 an ounce, from its peak of $2088.19 on Friday, December 28. US gold futures decreased by 0.3% to $2,088.60.

On Friday, data revealed that U.S. manufacturing declined further in February and that construction spending unexpectedly decreased in January. As a result, benchmark U.S. 10-year Treasury yields and the dollar index declined.

Bond yields are falling, which reduces the potential cost of keeping non-yielding metal, while a declining dollar makes gold more affordable for holders of other currencies.

There were poor results from the University of Michigan’s consumer sentiment poll.

The markets also assessed fresh issues at New York Community Bancorp, a regional U.S. institution, which raised demand for safe-haven assets like bullion.

Another set of data on Thursday suggested that the annual increase in U.S. inflation in January was the weakest in nearly three years, keeping a June rate decrease from the Fed on the table.

Interest rates that are lower increase the allure of non-yielding bullion.

The employment data for February, which is due on Friday, will be the next significant U.S. economic release.

In the week ending February 27, COMEX gold speculators increased their net long positions by 3,694 contracts to 68,042, according to data released on Friday.

In response to Impala Platinum’s announcement that it may decide to close loss-making shafts in six months if prices do not improve, Northam Platinum’s CEO stated on Friday that platinum mining companies in South Africa are facing their biggest crisis in three decades as prices plunge.

Palladium held constant at $957.88, spot platinum dipped 0.3% to $884.15 per ounce, and silver fell 0.6% to $23.02.

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