Gold prices fell back on Thursday in volatile conditions after surging to a new all-time high on Wednesday.
Prices dropped back as low as $2,168 an ounce on Thursday before recovering to around $2,182 later in the day. That compares with a high of $2,223 an ounce on Wednesday – a fresh all-time high for gold.
The fresh highs came as the markets continued to bet on interest rate cuts materialising in the coming months. The US Fed held rates unchanged at 5.5% on Wednesday as widely expected, and also continued to signal that three rate cuts are likely in 2024 overall. The markets are eyeing the first of those happening potentially as soon as June.
A loosening of monetary policy is bullish for precious metals as lower interest rates reduce the opportunity cost of holding non-yield-bearing assets.
Serving to highlight this factor for gold, the Swiss National Bank on Thursday surprised the markets by cutting interest rates by 25 basis points – its first cut in nine years – and making it the first major central bank to begin a rate-cutting cycle.
Thursday’s subsequent pull-back for gold prices may reflect profit-taking on Wednesday’s surge higher, which represented gains of around $45 an ounce in a single day.
Friday is looking light on data releases, although the markets may watch out for further monetary policy signals from planned speeches by US Fed officials. Further out, monthly US durable goods orders figures are due out on Tuesday next week, for the latest update on the state of the US economy.
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.
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.
Read our Editorial Guidelines here.
