Gold extends record run as Fed’s Powell hints at rate cuts
Prices rose by ₹500 to ₹65,650 per 10 grams, in an upward march for 3rd day in a row
Gold prices extended gains to hit an all-time high on Thursday after comments from US Federal Reserve chair Jerome Powell fostered expectations for lower US interest rates this year.
The prices jumped by ₹500 to ₹65,650 per 10 grams, maintaining its upward march for the third straight day, amid a rally in the precious metal’s rates in international markets, according to HDFC Securities.
Powell had on Wednesday said rate cuts will “likely be appropriate” later this year “if the economy evolves broadly as expected” and once officials gain more confidence in inflation’s steady deceleration. Gold tends to thrive when interest rates are low, which reduce the opportunity cost of holding non-yielding bullion.
Powell’s remarks, coupled with data indicating softer labour market conditions, pushed US Treasury yields and the dollar lower, boosting demand for gold.
In the global markets, spot gold at Comex was trading at $2,152 per ounce, up by $30 from the previous close. Comex spot gold reached a new high of $2,161.50 per ounce in Asian trading hours on Thursday. Bullion hit a record high of $2,161.09 earlier in the session and was on track for its longest intraday winning streak since at least November 2021.
Powell said that the US Fed remains squarely focused on its mandate to promote maximum employment and stable prices for Americans. The policy rate is likely at its peak and it will likely be “appropriate” to cut rates at some point this year, he added. However, he observed that the Federal Open Market Committee still needs “greater confidence” before cutting rates.
If the labour market data or next week’s inflation data shows any weakness, $2,300 would be the short term target based on technical levels, but that would be fairly a short-lived phenomenon, before prices correct and consolidate, Marcus Garvey, head of commodities strategy team at Macquarie, said.
“Prices can rally further on looming production cuts ... persistently weak secondary supply, and macro tailwinds including softer US economic data and strong China credit prints,” Citi research wrote in a note.
Powell’s remarks, and data indicating softer labour market conditions pushed US Treasury yields and dollar lower, boosting demand for gold