In Asian trade on Monday, gold prices experienced a slight dip but remained within proximity of two-month highs, fueled by increasing expectations of U.S. interest rate cuts this year. Spot gold slipped 0.1% to $2,080.86 an ounce, while gold futures expiring in April saw a 0.3% decline to $2,089.25 an ounce by 00:12 ET (05:12 GMT). Despite this minor pullback, both instruments posted significant gains of over 2% each during the past week, reaching their highest levels for 2024 and breaking out of the trading range established earlier in the year.
The surge in gold prices was a consequence of growing conviction in the market regarding potential U.S. interest rate cuts, particularly by June, prompted by softer economic data. However, as traders eagerly await key signals from the Federal Reserve later in the week, gold may experience a period of consolidation in the near term.
Other precious metals also saw a retreat on Monday, with platinum futures sliding 0.4% to $888.70 an ounce and silver futures falling 0.5% to $23.240 an ounce.
The upcoming two-day testimony by Fed Chair Jerome Powell is now the focal point for markets, with participants seeking further cues on the trajectory of interest rates. Analysts anticipate Powell to reaffirm a cautious stance, emphasizing the need for convincing evidence that inflation is on a path toward the Fed’s 2% annual target. Despite these expectations, traders continue to factor in a higher probability of a 25 basis point rate cut in June, as suggested by the CME Fedwatch tool.
Post-Powell’s testimony, attention will shift to the eagerly awaited nonfarm payrolls data for February, set to be released on Friday. The state of the labor market holds significance for the Fed’s considerations on potential adjustments to interest rates, making it a key point of interest for investors navigating the evolving landscape of gold prices amid broader economic uncertainties.
