Gold Prices Rise Supported by Expectations of US Interest Rate Cuts and Anticipation of Inflation Data
Gold prices saw a notable increase during trading on Wednesday, supported by expectations of interest rate cuts in the United States, and amid global market anticipation for the release of key inflation data scheduled for this week.
Spot gold recorded a rise of 0.4% to reach $3643.48 per ounce, after touching a record level of $3673.95 on Tuesday. Futures contracts for gold settled at $3680.30 per ounce.
In this regard, Kyle Rodda, a financial market analyst at Capital.com, commented: "Sentiment towards gold is extremely positive. Several key factors are currently driving gold prices, the most important being expectations of US interest rate cuts."
He added: "Short-term expectations are heavily reliant on the upcoming inflation data. If the data comes in somewhat strong, interest rate cuts may be delayed slightly, which could lead to a pullback in a market that is technically overbought."
US inflation data, including producer prices expected at 12:30 GMT, and consumer inflation data on Thursday, are being closely monitored by investors to assess the Federal Reserve's monetary policy trends.
This positive performance of gold follows employment data showing a decline in job growth in the US economy, with revised estimates indicating the creation of 911,000 fewer jobs over the 12 months ending in March, reflecting a slowdown in the labor market before tariffs were imposed during President Donald Trump's administration.
Non-farm payroll data released last week also bolstered expectations for an interest rate cut during the Fed's September monetary policy meeting. Market expectations indicate a full cut of 25 basis points, while the likelihood of a 50 basis point cut is only 6%, according to the FedWatch tool from the CME Group.
It is worth noting that gold prices have increased by 38% since the beginning of the year, following a jump of 27% during 2024, supported by a decline in the value of the dollar, increased central bank purchases, accommodative monetary policies, and rising global uncertainty. Gold, as a non-yielding asset, benefits from a low-interest-rate environment.
In a related context, other precious metal markets experienced upward movement, with spot silver rising 0.3% to $41 per ounce, platinum increasing 0.9% to $1,380.74, while palladium remained stable at $1,148.57 per ounce.
