Gold prices pushed up to an all-time high on Friday, as the markets weighed the probability that central banks would cut interest rates in the first half of 2024.
The yellow metal touched a high of just over $2,075 an ounce Friday, marking a third straight week of gains and eclipsing the previous all-time high reached in August 2020.
A number of bullish factors have contributed to propelling prices up to fresh highs.
Aggressive interest rate hikes over 2022 and 2023 had contributed to halting gold’s price gains and the markets have been mulling the likelihood that central banks have not only finished raising rates but could slash them in the first half of 2024.
Data from interest rate traders indicates a 55% probability that the US Fed will cut rates by 25 basis points at its meeting in March 2024, up from a 47% probability on Thursday last week, based on CME’s FedWatch Tool.
While the outlook for monetary policy could change depending on economic conditions and changes to rates of inflation, the financial markets are showing a growing belief that central bank rate cuts are on the horizon. Lower interest rates are bullish for gold prices because they reduce the opportunity cost of holding non-interest-bearing assets like precious metals.
Further factors recently supporting gold prices include a weakening US dollar through most of November and a risk premium in the price due to the ongoing conflict between Israel and Palestine.
On the economic data front, this coming week will see German balance of trade data due for release on Monday and US ISM Services PMI data on Tuesday, which may provide further clues on the status of major economies.
Carlo is an external market analyst for Kinesis Money. With a credential background in Economic Finance and International Exchange (MA), Carlo’s critical analysis of gold and silver markets’ performance is frequently quoted by leading publications such as Forbes, Reuters, CNBC, and Nasdaq.
This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.
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