Gold prices pulled back slightly on Thursday, having climbed to a seven-month high on Wednesday.
Prices moved in a range of $2,032 to $2,047 an ounce through the day, compared with a high of $2,052 an ounce on Wednesday. Wednesday’s spike in prices equalled gold’s highs seen in April and May, representing a seven-month high for the yellow metal earlier this week.
Technical traders will be watching to see if those highs can be sustained, and Thursday’s slight pull-back suggests the $2,050 level may be providing some resistance for the time being.
The US dollar bounced back Thursday against other major currencies, having sustained sharp losses through much of November. This helped to take the shine off gold, which is widely traded in the US currency.
Meanwhile, interest rate expectations continue to have a significant impact on gold prices, with the US Fed having hiked rates aggressively in 2022 and 2023. There are growing expectations in the market that this hiking cycle may have already peaked, and the markets are now betting on possible rate cuts in 2024.
The markets will be watching out for US Fed Chair Jerome Powell’s speech on Friday for further signals on monetary policy.
Data from interest rate traders indicates a 47% probability that the US Fed will cut rates by 25 basis points at its meeting in March 2024, and a 48% chance of that happening at its meeting in May.
A prolonged period of very low-interest rates, coupled with massive quantitative easing, was a key factor in gold’s dramatic price increase since the global financial crisis of 2008-2009. The hiking cycle seen over the last two years has contributed to halting gold’s upward march, and any eventual cutting of interest rates could once again provide a tailwind for the precious metal.
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