Gold prices soared to a record high in Asian trade on Thursday, propelled by remarks from Federal Reserve Chair Jerome Powell indicating potential interest rate cuts in 2024. The precious metal continued its strong rally from the previous week, driven by increasing optimism about U.S. interest rate cuts. Traders maintained their bets on an imminent rate-cutting cycle, with expectations as early as June.
Spot gold surged over 0.4%, reaching a record high of $2,161.19 per ounce, while gold futures expiring in April peaked at $2,168.10 per ounce. The recent rally is attributed to heightened investor demand, driven by the prospect of lower rates, robust safe-haven buying amid geopolitical risks, and an uncertain economic backdrop, as noted by analysts from ANZ.
In Powell’s recent testimony, he affirmed the Fed‘s intention to cut interest rates in 2024, favoring non-yielding assets like gold. However, Powell refrained from providing concrete details on the timing and extent of the planned cuts, emphasizing that the U.S. economy’s path and inflation trends would guide any monetary easing. Powell also highlighted the need for more convincing evidence that inflation is moving closer to the Fed’s 2% annual target.
Minneapolis Fed President Neel Kashkari added a note of caution, stating that he does not anticipate more than two rate cuts, or even just one, this year. Concerns over persistent inflation were echoed by several other Fed officials in recent weeks.
Although the dollar experienced a sharp decline in overnight trade, it showed mild recovery during the Asian session, particularly after Kashkari’s comments. Gold prices, while trading below intraday highs, maintained strength.
Other precious metals in Asian trade exhibited more subdued movements, with platinum futures steadying around $913.80 per ounce, and silver futures experiencing a slight dip to $24.477 per ounce.
Attention is now focused on the upcoming nonfarm payrolls data scheduled for Friday, providing further insights into the labor market, a crucial factor for the Fed’s rate adjustments. The prospect of prolonged higher interest rates remains a limiting factor for gold’s potential record highs.
