Gold Price News: Gold Rallies To Two-Month High As US industry Slows

Gold prices powered up to their highest level in two months on Friday, after US economic data prompted increased bets on a US Fed interest rate cut within the first half of the year.

Prices made hefty gains for a second consecutive day, rising as high as $2,088 an ounce. That was the highest price since late December 2023.

US ISM manufacturing PMI figures released Friday showed a larger than expected decline in manufacturing activity in February. Separate US consumer sentiment figures were also downwardly revised for February, contributing to the bearish picture for the US economy.

The latest figures raised expectations that the US Fed will have to start lowering borrowing costs to stimulate the economy, a bullish driver for precious metals prices.

Recent figures in the wider financial markets point to expectations of a roughly 55-60% chance of a first US interest rate cut at the Fed’s June 12 meeting, with much lower expectations of any earlier cuts materialising at upcoming Fed meetings on March 20 and May 1.

Following the release of the latest data on Friday, the yield on the US 10-year Treasury note fell to a two-week low of below 4.2%. Lower bond yields decrease the opportunity cost of holding non-interest-bearing assets like gold, boosting their appeal.

Looking ahead to this week, Tuesday will see the release of US ISM Services PMI figures for February, as well as factory orders for January, providing further indicators on the state of the economy.