Gold surges on safe-haven demand and weak dollar.

22 Feb 2024 , 09:52 AM

A weaker dollar and growing geopolitical unrest in the Middle East helped drive an increase in gold prices on Thursday, while the minutes of the most recent U.S. Federal Reserve meeting dashed expectations of an early interest rate cut.

Spot gold was up 0.1% at $2,026.9 an ounce. American gold futures increased by 0.1% to $2,035.8 an ounce.

As the health ministry of the destroyed Palestinian enclave declared 29,313 dead in the fighting thus far, Israel increased its shelling on Rafah in the southern part of Gaza.

The dollar index decreased by 0.1%, which allowed foreign buyers to purchase bullion priced in US dollars at a lower cost.

Richmond Fed president Thomas Barkin stated that the January inflation statistics, which showed consumer prices rising more quickly than expected, will complicate future Fed rate decisions.
According to the minutes of the Fed’s most recent meeting, which took place on January 30-31, most officials were worried about the dangers of lowering interest rates too quickly. 

The CME Fed Watch Tool indicates that markets are presently pricing in a 70% possibility of a cut in June. Investing in non-yielding bullion is more appealing when interest rates are lower.

Potential U.S. Federal Reserve interest rate cuts are projected to have the greatest immediate impact on commodities prices, with copper and gold expected to benefit the most, according to Goldman Sachs analysts.

Palladium increased by 0.5% to $954.68 per ounce, spot platinum increased by 0.2% to $885.08 per ounce, and silver increased by 0.2% to $22.90 per ounce.

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