Gold prices jumped higher on Thursday after US economic figures made a stronger case for interest rate cuts in the coming months.
Prices initially drifted lower to reach $2,028 an ounce around midday, but the market staged a dramatic rebound moving into the early afternoon session, to reach as high as $2,050 an ounce by mid-afternoon.
The catalyst for the latest gains appeared to be the release of weekly US initial jobless claims data, which showed that the number of Americans seeking unemployment benefits jumped by 13,000 to 215,000 in the week to February 24, above the market’s expected 210,000. Signs of a weaker economy suggest the need for looser monetary policy by the US Fed, which supports precious metals as an investment asset.
The latest jobless figures followed hot on the heels of Wednesday’s downwardly revised US GDP figure for Q4 2023 of 3.2%, compared with the initial assessment of 3.3%. Taken together, the fresh macroeconomic figures lend support to the case for more dovish US monetary policy, and the wider financial markets now appear to be betting on June as the start of a possible US interest rate-cutting cycle.
Friday is also shaping up to be an interesting day, with the Euro Area inflation rate figures for February due out in the morning, followed by the monthly US ISM manufacturing PMI figures in the afternoon, providing the latest pulse check on the state of the US industry. Capping off the week will be a series of speeches by US Fed officials which could provide further clues on the future path for interest rates.
Frank’s experience covering the commodities markets spans 22 years, with a particular specialism in metals, carbon and energy markets. He has worked as a senior editor for S&P Global Commodity Insights (formerly Platts) and before this, at ICIS-LOR, a part of Reed Business Information (Reed Elsevier), where he covered the petrochemicals markets from 2003 to 2005.
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