Gold set for third weekly gain on US rate cut expectations
Gold prices are on track for a third weekly gain as investors weigh U.S. rate cut prospects against a firm dollar. Markets await inflation data for policy clues.
Gold prices edged lower on Friday as a stronger dollar and persistent geopolitical uncertainty in the Middle East tempered demand. Despite the daily decline, the metal is positioned for its third consecutive weekly advance, as investors anticipate potential interest rate adjustments in the United States.
Spot gold was down 0.1% at $4,759.54 per ounce, yet it remains up 1.8% for the week. U.S. gold futures for June delivery also saw a decrease, falling 0.7% to $4,782.70. The strengthening dollar index has contributed to the pressure, making bullion more expensive for those holding other currencies. Market analysts suggest that the lack of a clear resolution regarding the ceasefire between the U.S. and Iran is keeping investors cautious.
There is a lack of clarity about the way that the ceasefire is evolving in the Middle East and what that means to energy markets, so we are in sort of a little bit of a holding pattern with gold going into the final session of the week.
Since the conflict involving Israel began on February 28, spot gold has seen a total decline of approximately 10%. High energy costs have continued to fuel inflation concerns, which in turn impacts the outlook for interest rates. Meanwhile, Brent Crude Oil has dropped more than 11% this week, driven by hopes that a diplomatic breakthrough could secure the Strait of Hormuz, a vital passage for global energy supplies.
If things break down, gold could end up back in mid-$4,000s pretty quickly, but if the ceasefire holds and the peace deal starts to look more likely, then we could push through $5,000.
On the economic front, the U.S. Personal Consumption Expenditures index rose 2.8% over the 12 months ending in February, meeting market expectations. Investors are now awaiting the release of the March Consumer Price Index for further guidance on the Federal Reserve's monetary path. Current market pricing indicates a 31% chance of a rate cut in December, up from 20% previously.
In other metals trading, Silver gained 0.9% to reach $75.74 per ounce. Conversely, Platinum fell 2% to $2,061.06, and Palladium declined by 1.2% to $1,539.43.
