Gold prices remain above $2,100

Gold prices remained above the $2,100 mark on Wednesday, close to the record high reached in the previous session.

This surge is fueled by expectations of US interest rate cuts by mid-year, with traders anticipating insights on the economy from Federal Reserve Chair Jerome Powell. Spot gold dipped slightly to $2,126.13 per ounce, while US gold futures fell to $2,134.30. The record peak of $2,141.59 per ounce was reached overnight on Tuesday, marking a fifth consecutive session of gains.

According to Ajay Kedia, director at Kedia Commodities in Mumbai, the rally in gold is sentiment-driven, spurred by last week’s disappointing US economic data, which suggested a potential rate cut in June. However, without additional factors such as fluctuations in the dollar or geopolitical tensions, gold could experience profit-taking.

Traders are assessing risks to the US economy amidst a high-interest rate environment, seeking clarity from Powell’s testimony.

Recent data indicated a slowdown in the US services industry and a larger-than-expected drop in new orders for US-manufactured goods in January.

This week’s labour market data will also be closely monitored, with any downside surprises likely to bolster gold prices.

Market sentiment suggests a 71 per cent probability of a June rate cut by the Fed, which would enhance the appeal of gold as a non-yielding asset.

Kunal Shah, head of research at Nirmal Bang Commodities in Mumbai, notes that central banks have been consistently buying more than 1,000 tons of gold annually for the past two years, compensating for declines in retail and ETF demand.

Spot platinum rose to $884.16 per ounce, palladium increased to $958.20, and silver dropped to $23.63.