Gold prices surge over US rate-cut expectations

Gold prices surged on Thursday, heading for their largest monthly increase since November 2022 due to a strong rally driven by expectations of US interest rate cuts, robust safe-haven demand, and central bank purchases, Reuters reported.

Spot gold rose by 0.8 per cent to $2,212.47 per ounce, as of 1059 GMT, on track for a monthly gain of over eight per cent and a second consecutive quarterly rise. US gold futures also increased by 0.9 per cent to $2,232.60.

The record high gold reached last week was fuelled by the Federal Reserve’s projection of three rate cuts in 2024.

The precious metal has maintained its position near the peak as traders await key US data that could impact the central bank’s monetary policy.

Investors are closely monitoring the upcoming US initial jobless claims report and the US core personal consumption expenditure (PCE) price index report for potential signals on the Fed’s rate-cutting intentions.

Market expectations currently indicate a 64 per cent probability of a rate cut in June, according to the CME Group’s FedWatch Tool. Lower interest rates typically make holding gold more attractive.

However, Fed Governor Christopher Waller has suggested that recent economic data may warrant delaying or reducing the magnitude of rate cuts.

This has led some analysts to caution that the market may be underestimating the potential risks of delayed or smaller rate cuts by the Fed.

Silver remained steady at $24.67 per ounce, platinum increased by 0.7 per cent to $900.10, and palladium rose by 1.6 per cent to $999.12.