Gold prices experienced a slight uptick on Monday, driven by renewed speculation that the U.S. Federal Reserve might initiate interest rate cuts as early as June, coupled with a weaker dollar, which bolstered the appeal of bullion.
As of 0648 GMT, spot gold saw a 0.1% increase, reaching $2,166.39 per ounce, while U.S. gold futures climbed 0.4% to $2,167.70 per ounce.
The dollar exhibited a 0.1% decline against its counterparts, rendering gold more attractive for investors holding other currencies. Tim Waterer, chief market analyst at KCM Trade, remarked that the environment continues to appear favorable for precious metal markets, highlighting expectations of impending rate cuts by the Federal Reserve.
Market sentiment remains optimistic regarding potential rate cuts, with June emerging as the likely timeframe for the Fed to implement its first rate reduction.
Gold prices surged to record highs last Thursday following indications from Fed policymakers that they anticipate reducing interest rates by three-quarters of a percentage point by the end of 2024, notwithstanding recent spikes in inflation.
The prospect of lower interest rates diminishes the opportunity cost of holding gold, thereby enhancing its attractiveness to investors.
Traders are currently pricing in a 74% probability of the Fed commencing rate cuts in June, as per the CME Group’s FedWatch Tool.
Investors are eagerly anticipating the release of the U.S. core personal consumption expenditure (PCE) price index data on Friday to gauge its potential impact on the Fed’s rate projections for the year.
While the PCE data is anticipated to reveal a 0.3% increase in February, maintaining the annual pace at 2.8%, the full market reaction is expected to unfold next week due to the closure of many markets on Good Friday.
According to Reuters’ technical analyst Wang Tao, spot gold might encounter support at $2,161 per ounce and retreat to a range of $2,147-$2,152.
In the broader precious metals market, spot silver slightly eased to $24.62 per ounce, platinum saw a 0.2% increase to $896.23, and palladium climbed 0.8% to $993.37 per ounce.
