Gold Prices Dip but Remain Above $2,100 as Rate Cut Expectations Rise
Gold prices edged lower on Wednesday but held above the $2,100 an ounce level, after rising bets for a June U.S. interest rate cut propelled bullion to a record peak in the previous session, ahead of Federal Reserve Chair Jerome Powell’s testimony.
Fundamentals:
- Spot gold edged down 0.2% at $2,124.46 per ounce, as of 0229 GMT. U.S. gold futures fell 0.4% to $2,132.90.
- Spot prices hit a record peak of $2141.59 per ounce overnight on Tuesday, rallying for a fifth straight session.
- U.S. services industry growth slowed a bit in February amid a decline in employment and new orders for U.S.-manufactured goods dropped more than expected in January.
- Benchmark 10-year U.S. Treasury yields hovered near one-month low levels, making non-yielding bullion more attractive.
- Money market pricing shows traders see a 71% probability that the Fed would begin cutting rates in June, up from 65% on Tuesday morning, according to LSEG’s interest rate probability app.
- Lower rates boost the appeal of non-yielding bullion.
Investor Focus on Powell’s Testimony:
The crypto reader’s attention is currently on Federal Reserve Chair Jerome Powell’s first day of semi-annual testimony before Congress on the state of the U.S. economy. The outcome of his testimony can significantly impact gold prices and market sentiment.
Rise and Retreat of Bitcoin:
The world’s largest cryptocurrency, bitcoin, also experienced a surge to a record high overnight before retreating sharply. This volatility in bitcoin’s price demonstrates the unpredictable nature of the cryptocurrency market.
Weak Economic Indicators:
Data from last week showed that U.S. manufacturing slumped further in February and inflation gradually eased, while consumer sentiment remained weak. These indicators contribute to the growing expectations of a U.S. interest rate cut.
Other Precious Metals:
- Spot platinum fell 0.1% to $879.46 per ounce.
- Palladium edged 0.2% lower to $946.51.
- Silver dropped 0.4% to $23.59.
Hot Take: Gold Prices Remain Steady Amid Rate Cut Speculations
The recent dip in gold prices, while remaining above the $2,100 level, reflects the increased expectations of a June U.S. interest rate cut. Investors are closely watching Federal Reserve Chair Jerome Powell’s testimony for further insights into the state of the U.S. economy and potential monetary policy changes.
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