Rising Rate Cut Expectations Push Gold Prices Near Record High

21 May 2024 , 08:20 AM

Tuesday saw a little increase in gold prices as recent economic data increased expectations that the US Federal Reserve will begin reducing interest rates later this year. The metal was trading close to a record top reached during the previous session.

Spot gold was up 0.1% at $2,428.14 an ounce. On Monday, gold reached a record high of $2,449.89.  At $2,431.80, gold futures dropped 0.3%.

U.S. consumer prices climbed less than anticipated in April, according to data, indicating that inflation has resumed its downward path and raising prospects for a rate decrease in September.

Despite last week’s cooling figures, Fed officials are not prepared to declare that inflation is approaching the 2% objective set by the US central bank; in fact, a number of them have called for continuing policy restraint.

Although gold is seen as an inflation hedge, owning non-yielding gold has a greater opportunity cost as interest rates rise.

As the time for BHP Group to file a formal takeover offer draws near, Anglo American shareholder Legal & General Investment Management (LGIM) is in favour of the break-up plan that the firm unveiled last week.

Investors worried that China’s “historic” efforts to stabilise its crisis-hit real estate market would not be sufficient to support a long-term upturn in demand and confidence, which caused shares of Chinese developers to take a hit.

The risk appetite of investors does not appear to be decreasing, which should open the door for additional gains throughout the continent when trading resumes in the absence of any significant economic data or events in Asia that could move the market.

In other news, the prosecutor for the International Criminal Court announced that he had asked for arrest warrants for three Hamas leaders, Israeli Prime Minister Benjamin Netanyahu, and his defence minister due to suspected war crimes.

Spot silver increased 1.3% to $32.25 per ounce, while palladium dropped 0.4% to $1,023.25, and platinum decreased 0.1% to $1,045.80.

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