Gold prices surged to near all-time highs, nearing $2,230 per troy ounce, as the precious metal sought to extend its winning streak for the fifth consecutive session on Friday. However, trading volumes remained light as market participants largely observed Good Friday, contributing to subdued activity.
Investor interest in gold remains strong as market sentiment leans towards major central banks initiating an interest rate-cut cycle later this year. This optimism is fueled by expectations of three rate cuts from the US Federal Reserve (Fed) in the coming months. Chicago Fed President Austan Goolsbee, who leans towards a dovish stance, has signaled his anticipation of these cuts but emphasized the importance of monitoring inflation trends before taking action.
European Central Bank (ECB) policymakers have also hinted at potential monetary policy adjustments. ECB executive board member Fabio Panetta remarked that “the conditions to begin easing monetary policy are emerging,” while Francois Villeroy suggested that achieving the ECB’s inflation goal of 2% is feasible. However, Villeroy cautioned against escalating downside risks if the ECB opts against rate cuts.
In Europe, the Swiss National Bank’s unexpected rate cut at its March meeting has sparked speculation that other major central banks may follow suit. Additionally, while the Bank of Japan has ceased its negative rate policy, it is expected to maintain an accommodative stance in the foreseeable future.
On the geopolitical front, despite the United Nations Security Council passing a resolution urging a ceasefire between Israel and Hamas, tensions in the Gaza Strip persist. Palestinian militants have yet to release any captives, and reports from the Palestinian Red Crescent indicate that Israeli forces have besieged additional Gaza hospitals, trapping medical personnel amidst intense gunfire. The escalation of these tensions has contributed to heightened demand for safe-haven assets like gold.
