Gold prices surged to new heights on Thursday, extending their winning streak to seven consecutive days, led by weak U.S. economic data and Federal Reserve Chair Jerome Powell’s indications of potential rate cuts in the coming months if inflation eases.
Spot gold saw an increase of 0.39 percent to $2,156.55, after hitting an all-time high of $2,161.09 earlier in the session. Meanwhile, U.S. gold futures saw a 0.21 percent increase to $2,162.75.
In Dubai, gold prices saw an increase. Twenty-four-carat gold was priced at AED261.50 per gram, a AED4 increase. Meanwhile, 22-carat stood at AED242 per gram, up AED8.75.
Powell’s remarks
Powell’s statement on the likelihood of interest rate cuts in the near future, contingent upon easing inflation and evolving economic conditions, spurred investor interest in gold. Hence, lower interest rates boost the appeal of non-yielding bullion. Analysts noted that the marginal weakness in U.S. data provided further support for the rally in gold prices. The substantial movement in gold prices may have been influenced by significant futures buying initiated earlier in the week.
Powell’s remarks, and data indicating a softening of labor market conditions, resulted in U.S. Treasury yields and the dollar sliding, increasing the appeal of gold.
Market outlook
Analysts foresee further upside potential for gold prices, with $2,300 identified as a short-term target based on technical levels. However, this surge is expected to be short-lived, with prices likely to correct and consolidate thereafter. Analysts also expect central bank buying to continue due to continued geopolitical uncertainty. Moreover, the slowdown in China will keep global growth contained. Therefore, in an uncertain financial environment, gold will remain a safe investment for banks.
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Broader market trends
Similar to gold prices, silver experienced gains, rising 0.4 percent to $24.25 per ounce. In contrast, platinum saw a slight decline of 0.1 percent to $906.82 per ounce, while palladium slipped 0.8 percent to $1,033.44. The mixed performance of these precious metals reflects the complex interplay of market dynamics influenced by economic data and central bank policies.
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