Gold prices surged on Friday, set for their most significant weekly increase in five months, as they hovered near historic highs. Federal Reserve Chair Jerome Powell’s remarks solidified expectations of rate cuts mid-year, adding to the bullish sentiment ahead of a crucial jobs report.
Spot gold saw an increase of 0.02 percent to $2,160.48, hovering around the all-time high of $2,161.09 it hit in the previous session as of 6:38 GMT. Meanwhile, U.S. gold futures saw a 0.14 percent increase to $2,168.15.
In Dubai, gold prices remained relatively stable. Twenty-four-carat gold was priced at AED261.25 per gram, a AED0.25 decline. Meanwhile, 22-carat remained stable at AED242 per gram.
Driving factors
Market experts attributed the gold rally to a combination of short-term speculative activity, primarily driven by Commodity Trade Advisors (CTAs) and algorithmic trading. Moreover, expectations of imminent interest rate cuts further supported gold prices. Powell’s remarks suggesting the Federal Reserve’s inclination towards interest rate cuts in the coming months have bolstered investor confidence in gold as a safe-haven asset.
Traders are currently pricing in three to four quarter-point U.S. interest rate cuts, with a 75 percent likelihood of the first cut occurring in June, according to LSEG‘s interest rate probability app. Lower interest rates enhance the attractiveness of gold as it is a non-yielding asset.
Other influencing factors
The rally in procyclical asset classes, notably equities, has also contributed to the robust support for gold prices in recent weeks, as investors seek to diversify their risk exposure. Furthermore, the weakening of the U.S. dollar, heading for its sharpest weekly decline of the year, has made bullion more affordable for holders of other currencies.
Investor attention now turns to the forthcoming U.S. jobs data scheduled for release at 13:30 GMT. This data release could provide further insights into the economic landscape and potentially impact market sentiment towards gold.
Read: Oil prices rise as demand in U.S. and China soars
Other precious metals
While gold prices rallied, other precious metals have also witnessed notable movements. Spot platinum experienced a decline of 0.3 percent to $916.30 per ounce, while silver fell marginally by 0.1 percent to $24.29. In contrast, palladium rose by 0.5 percent to $1,039.17 per ounce. Despite minor fluctuations, all three metals are on track for a weekly gain.
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