Posted by Parani Krishnan
Investing.com – After small but steady daily gains that came like pouring rain, the water is now pouring into the land of gold.
Both futures contracts for the yellow metal on Comex in New York and bullion traded in the spot gold market jumped nearly 2% on Tuesday — the highest in nearly two weeks — penetrating deeper into the $2,000 region, with new highs likely in days.
Craig said the recent rally in gold prices from a one-week hiatus to a four-week rally is “a sign that traders are not budging from their view that US interest rates are at or near their peak, and they expect them to go lower this year.” Irlam, analyst at online trading platform Onda.
“A move above this would highlight record highs around $2070 but that could depend on expectations of future interest rates being cut further and more risk aversion in the markets.”
Comex in New York settled at $2038.20 an ounce, up $37.80, or 1.9%, after a session high of $2043.25.
It, which was closely watched by some traders, reached above $2025. Spot trading in gold is usually settled after 18:00 ET (22:00 GMT).
The all-time high for gold futures is at $2,078.80, while the all-time high for spot is $2,072.90.
“The spot’s $2025 spot confirms the continuation of the bullish trend that has dominated gold this week, and reminds us that the next stop is at $2040, which is a futures level that has already been breached,” said Sunil Kumar Dixit, Chief Technical Strategist at SKCharting.
“The next leg of the rally at $2060 will bring us closer to a record high that looks more and more certain by the day. But if we fail to hold the levels above $2010, we will push towards the $2000 and $1990 support areas in the spot market,” Dixit added.
Gold’s advance on Tuesday came on the back of data that showed it reaching 9.9 million in February, the lowest number since May 2021, amid indications that the labor market may be beginning to ease – which is good news for the Fed’s inflation fighters.
The Fed continued to raise rates aggressively until it reached 5%.
Until the job vacancies data came out on Tuesday, there were bets that the Fed might resort to at least one additional hike in May to cool down an annual rate hike of 6% in January against the central bank’s 2% target. These expectations were reinforced by a 5% rise in global markets on Monday, after a surprise production cut by OPEC+ producers. Oil prices are one of the main drivers of headline inflation.
But as of Tuesday, money market traders followed by Investing.com appeared to be betting that the Fed may be ending a cycle.
The latest reading from Investing.com showed that the probability of the central bank raising interest rates another quarter point was just 42.2% in May. The bets on the installation amounted to 57.8%.
