Gold bulls eyeing $3,000 milestone
Holdings of SPDR Gold Trust ETF highest since Jan
Odds of 25 bps US rate cut next week at 57% – CME FedWatch
Palladium up 17% for the week
(Updates prices as of 1745 GMT)
By Anushree Ashish Mukherjee and Swati Verma
Sept 13 (Reuters) – Gold prices powered higher on Friday, beating record levels, as a boost in bullish momentum fuelled by optimism that the U.S. Federal Reserve is on the brink of trimming interest rates was catalysed by fund inflows and a drop in the dollar.
Spot gold was trading at record levels, up 0.9% at $2,582.04 per ounce by 1:45 p.m ET (1745 GMT).
U.S. gold futures settled 1.2% higher to $2,610.70.
Gold market bulls are locking in bullion prices surging to fresh records, with a milestone of $3,000 per ounce coming into focus, fired up by monetary easing by major central banks and a tight U.S. presidential election race.
The stars are aligned in favor of the gold and silver market bulls as the European Central Bank lowered its main interest rate this week, the Fed is likely to lower it next week and tame U.S. inflation data, Jim Wyckoff, senior market analyst at Kitco Metals, said.
Markets fully price a rate cut next week, with a 57% chance of 25-bps U.S. rate cut and a 43% chance of a 50-bps cut, the CME FedWatch tool showed. This would be Fed’s first rate cut since 2020.
“The market is still expecting the Fed to cut interest rates by around 100 basis points by the end of the year, i.e. rates would have to be cut by 50 basis points at one of the two remaining meetings after September,” Commerzbank analysts said.
“It is, therefore, likely due to these aggressive interest rate cut expectations for the coming months that the gold price is rising.”
Further driving interest in bullion, the dollar fell on Friday to its lowest level this year against the Japanese yen.
Global physically backed gold exchange-traded funds saw a fourth consecutive month of inflows in August, the World Gold Council said last week.
Holdings of the world’s largest gold-backed ETF SPDR Gold Trust were at their highest levels since early January on Thursday.
From a technical point of view, the Relative Strength Index currently at 69 suggests that the gold price is approaching the “overbought” territory, starting at 70.
Palladium rose 2% to $1,067.43 and has
about 17% so far this week.
Spot silver rose 2.3% to $30.61, and platinum added 2.4% to $1,000.57.
(Reporting by Anushree Mukherjee and Swati Verma in Bengaluru; Editing by Vijay Kishore Shailesh Kuber and Alan Barona)
Gold Bulls Eyeing $3,000 Milestone:
Gold prices have been on the rise, surpassing record levels and showing strong bullish momentum. This surge in price is fueled by optimism surrounding potential interest rate cuts by the U.S. Federal Reserve, coupled with increased fund inflows and a decline in the value of the dollar. Gold has been trading at record levels, reaching $2,582.04 per ounce, with expectations of hitting the $3,000 milestone.
Insight: The current economic climate, characterized by uncertainties surrounding global events and monetary policies, has created a favorable environment for gold prices to continue their upward trajectory.
Factors Driving Gold Prices Up:
Various factors are contributing to the bullish sentiment in the gold market. The European Central Bank’s recent decision to lower interest rates, anticipation of a rate cut by the Fed next week, and subdued U.S. inflation data are all playing a part in boosting gold prices. Market analysts are optimistic about the potential for further rate cuts, with expectations of up to 100 basis points by the end of the year.
Insight: The ongoing economic uncertainties and geopolitical tensions are prompting investors to seek safe-haven assets like gold, driving up demand and prices.
Increased Interest in Bullion:
The weakening dollar has also been a driving factor behind the increased interest in bullion. With the dollar falling to its lowest level of the year against the Japanese yen, investors are turning to gold as a hedge against currency fluctuations. Additionally, physically backed gold exchange-traded funds have seen consistent inflows, indicating strong investor appetite for the precious metal.
Insight: The current market conditions, marked by currency volatility and economic instability, are making gold an attractive investment option for investors seeking stability and long-term value preservation.
Technical Analysis and Other Precious Metals:
From a technical standpoint, the Relative Strength Index suggests that gold prices are nearing the “overbought” territory, indicating a potential correction in the near future. Palladium has also seen a significant increase, rising 17% for the week, while silver and platinum have also experienced gains.
Insight: While gold remains a strong focus for investors, other precious metals like palladium, silver, and platinum are also attracting attention due to their performance in the current market environment.
In conclusion, the outlook for gold prices remains positive, with bullish momentum driving the metal towards new milestones. As economic uncertainties persist and central banks continue to implement accommodative policies, gold is likely to remain a favored asset for investors seeking stability and security in their portfolios.
