Gold prices were on course for their third consecutive week of gains on Friday, with anticipation building ahead of the release of highly anticipated U.S. non-farm payrolls data. These gains were fueled by robust inflows into safe-haven assets and the expectation of a downward trajectory in U.S. interest rates throughout the year.
At 1214 GMT, spot gold registered a modest 0.1% increase, reaching $2,291.20 per ounce, following a record high of $2,305.04 achieved on Thursday. This week alone, bullion has surged by 2.6%.
Simultaneously, U.S. gold futures saw a marginal uptick of 0.1%, climbing to $2,310.40.
According to Ricardo Evangelista, a senior analyst at ActivTrades, the recent upward momentum in gold prices can be attributed to a combination of heightened geopolitical tensions and widespread expectations of Federal Reserve rate cuts in the first half of the year.
Evangelista further noted that the impending release of U.S. employment data holds significant potential to either confirm the Federal Reserve’s current hawkish stance, advocating for sustained higher interest rates, or disrupt that trajectory, potentially reviving expectations of an initial rate cut in June.
Federal Reserve Chair Jerome Powell has reiterated the central bank’s cautious approach towards implementing its first rate cut, citing the strength of the economy and recent indications of elevated inflation.
Market sentiment suggests a 65% probability of a Fed rate cut in June, as per the CME FedWatch tool. Lower interest rates diminish the cost of holding bullion, potentially bolstering its attractiveness to investors.
Hugo Pascal, a precious metals trader at InProved, noted that gold is currently trading in overbought territory. He anticipates a correction in the near future, identifying $2,250 as the initial target price.
Meanwhile, spot silver experienced a 1% decline to $26.66 per ounce, retracing from its peak since June 2021 reached on Thursday. Platinum also saw a slight decrease of 0.2% to $924.10. Despite these declines, both metals remain on course for a weekly increase.
Palladium registered a 1.3% dip, reaching $1,008.01.
This news update provides insights into the current dynamics of precious metals markets.