Gold Holds Near Record Highs as Investors Await Fed Chairโs Testimony
Gold continues to shine as it hovers near its previous sessionโs record highs, with investors eagerly anticipating Federal Reserve Chair Jerome Powellโs testimony later in the day for clues on a potential June rate cut. The precious metal is holding steady at $2,126.75 per ounce, after reaching an all-time high of $2,141.59 per ounce in the prior session. Meanwhile, U.S. gold futures have experienced a slight decline of 0.3% to $2,135.20.
Bullion and Cryptocurrency Surge Amidst Rate Cut Expectations
Gold has not only surged against the U.S. dollar but also against other major currencies, driven by increased expectations of interest rate cuts and fears of a potential correction in stock markets. The appeal of non-yielding bullion has been boosted by weaker U.S. economic data and strong demand for alternative asset classes like bitcoin and gold.
- Commerzbank analyst Carsten Fritsch highlights that demand for both bitcoin and gold has been driven by expectations of interest rate cuts and fears of a market correction.
- Spot goldโs 14-day relative strength index reached 78, indicating it is currently overbought.
- Fritsch suggests that the gold price may have run too far in the short term and anticipates a correction.
- Traders see a 69% chance of a June rate cut by the Federal Reserve.
Powellโs Testimony and Market Expectations
The focus now turns to Powellโs first day of semi-annual congressional testimony on the state of the U.S. economy, particularly in relation to interest rates. Market analysts have varying opinions on what Powellโs testimony might reveal:
- UBS predicts that rate cuts may be delayed but are likely to start in 2024.
- Investors expect a mid-year rate cut by the Federal Reserve.
- If a rate cut is confirmed, Commerzbank analyst Carsten Fritsch forecasts spot gold to rise to $2,250 per ounce by the end of 2024.
Other Metals Performance
In addition to goldโs impressive performance, other metals have also experienced gains:
- Spot silver rose 0.1% to $23.70 per ounce.
- Platinum increased by 0.9% to $888.38 per ounce.
- Palladium gained over 1% and reached $958.93 per ounce.
Hot Take: Gold Continues to Shine Amidst Uncertainty
The strong performance of gold and other precious metals reflects the current uncertainty in global markets and investorsโ search for safe-haven assets. As investors eagerly await Powellโs testimony and potential rate cut announcements, it remains to be seen how these developments will impact the price of gold in the short term. However, many experts anticipate a correction in gold prices as they believe it has run too far for now. Nevertheless, the long-term outlook for gold remains positive due to factors such as central bank buying, demand from China, and an expected revival in demand for gold exchange-traded funds.
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