Gold Prices Rise on Expectations of Interest Rate Cuts and US Economic Data

Gold prices rose about $4 during today’s trading, Wednesday, December 20 (2023), with the decline in the dollar and US Treasury bond yields.

This comes amid expectations of interest rate cuts from the Federal Reserve next year, while investors await US inflation numbers later this week to obtain more data.

Gold prices ended their trading yesterday, Tuesday, December 19, at an increase of $12, with the US currency declining, and investors awaiting more US economic data this week.

Gold prices today

By 07:30 AM GMT (10:30 AM Mecca time), gold futures prices – for delivery in February 2024 – rose by 0.18%, or the equivalent of $3.6, to reach $2,055.7 per ounce.

The prices of contracts for immediate delivery of gold increased by 0.14% to $2,043.21 per ounce, according to figures seen by the specialized energy platform.

At the same time, the spot price of silver metal rose by 0.29% to $24.12 per ounce, and the spot price of platinum rose by about 0.41% at $961.17 per ounce, while the spot price of palladium fell by 0.79%, to record $1,220.50 per ounce.

It also rose Dollar index – which monitors the performance of the US currency against 6 major currencies – by 0.08%, reaching the level of 102.25 points, near its lowest level in 4 months.

US 10-year Treasury bond yields fell near their lowest levels since July.

Gold jewelry in an exhibition – photo from Reuters

Gold price analysis

Last week, the Federal Reserve signaled that the tightening phase is over, stating that interest rate cuts are on the way for 2024.

Atlanta Federal Reserve President Rafael Bostic said yesterday, Tuesday, that there is currently no “urgency” to cut rates.

“The Fed is holding back on rate cuts, and unless we see a materially weaker report on PCE inflation, there could be room for disappointment from those calling for a rate cut in March,” said City Index senior analyst Matt Simpson. “And limit the possibilities of an upward trend in gold prices.”

Markets expect a roughly 75% chance of a Fed rate cut in March, according to data seen by the specialized energy platform.

Low US interest rates are putting pressure on the dollar and US Treasury yields, making non-yielding bullion more attractive.

Gold prices in 2024

“Gold prices could certainly reach a new high in 2024, but the bigger question is whether they can hold on to any such breakout, given their inability to hold above $2,075 for any length of time over the years,” Simpson added. As you mentioned Reuters.

Investors are now awaiting the November core PCE report, the Federal Reserve’s preferred measure of core inflation, due on Friday.

Chicago Fed President Austan Goolsbee said that further progress in overcoming inflation will be the deciding factor in any decision by the Federal Reserve next year to lower interest rates.

Meanwhile, Swiss gold exports fell in November, partly due to lower shipments to India, Swiss customs data showed on Tuesday.

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2023-12-20 07:54:32
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