BENGALURU – Gold prices ticked slightly higher on Wednesday, bolstered by a dip in US Treasury yields as investors await crucial US economic data that could shed light on the Federal Reserve’s forthcoming interest rate decisions. Market participants are particularly focused on upcoming retail sales figures, industrial production data, and weekly jobless claims, which could signal how soon and how aggressively the Fed might ease monetary policy.
Spot gold climbed 0.3% to $2,667.97 per ounce as of 2:17 a.m. GMT, approaching its record high reached last month. US gold futures similarly saw an uptick of 0.2%, rising to $2,683.80.
US Treasury Yields Ease, Supporting Gold
The steady decline in US Treasury yields over the past three sessions has boosted the appeal of gold, which provides no yield but is seen as a safe haven during times of economic uncertainty. Lower yields tend to reduce the opportunity cost of holding gold, making the precious metal a more attractive investment.
“The game changer in gold prices is the US monetary policy easing as it sets the stage for investment demand,” said Soni Kumari, a commodity strategist at ANZ. Kumari also pointed out that ongoing uncertainty around the US elections and geopolitical tensions globally are likely to provide further support to gold prices in the coming months.
Investors Eye US Data for Fed Policy Clues
Traders and investors are now looking toward Thursday’s data releases for retail sales, industrial production, and weekly jobless claims to glean insights into the Federal Reserve’s next moves. These indicators could provide more clarity on how much the US economy is slowing down, which in turn will shape expectations for the Fed’s interest rate cuts.
Market analysts estimate a 97.2% probability that the Federal Reserve will implement a 25 basis point (bp) rate cut in November. The US central bank has been signaling its openness to further monetary easing if economic conditions warrant it.
San Francisco Federal Reserve Bank President Mary Daly recently reiterated that the Fed is prepared for more rate cuts in 2024, provided economic data supports such moves. Meanwhile, Atlanta Fed President Raphael Bostic stated that his projections included one more 25 bp reduction in 2024, based on his assessment during the central bank’s September meeting.
Geopolitical Tensions Add Support to Gold
Aside from domestic economic factors, global geopolitical events continue to contribute to gold’s appeal as a safe-haven asset. In the Middle East, Israeli Prime Minister Benjamin Netanyahu indicated he would not agree to a ceasefire with Hezbollah unless the group ceased its efforts to rearm, further stoking concerns of prolonged instability in the region.
In the face of these uncertainties, investors are maintaining their positions in gold, which is often seen as a hedge against both inflation and geopolitical risk.
LBMA Forecasts Gold to Climb Higher
The outlook for gold remains bullish according to participants at the annual meeting of the London Bullion Market Association (LBMA). Delegates at the gathering forecast that gold prices could reach $2,941 per ounce over the next 12 months, reflecting optimism that global economic uncertainty and central bank policies will continue to favor the precious metal.
Silver prices are also expected to climb significantly, with the LBMA predicting an increase to $45 per ounce in the coming year. As with gold, silver has benefited from its dual role as both an industrial metal and a safe-haven investment during times of financial turbulence.
Silver, Platinum, and Palladium Show Gains
Spot silver gained 0.3% on Wednesday, trading at $31.56 per ounce. Like gold, silver has been supported by easing Treasury yields and investors’ cautious outlook on the broader economy.
Platinum prices saw a stronger rise, advancing 0.6% to $990.49, while palladium edged up 0.2% to $1,011.47. Both metals, which are used primarily in the automotive industry for catalytic converters, have seen fluctuations in recent months due to shifting demand patterns and supply concerns.
Conclusion: Gold’s Future Looks Bright Amid Uncertainty
As market participants await further economic data from the US, gold continues to attract attention as a safe haven. The combination of declining Treasury yields, expectations of further Federal Reserve rate cuts, and ongoing geopolitical tensions have positioned gold for continued strength.
With a 97.2% chance of a Fed rate cut in November and forecasts suggesting gold prices could rise to nearly $3,000 per ounce over the next year, the outlook for the precious metal remains positive. Silver, platinum, and palladium are also expected to benefit from the current economic climate, particularly if uncertainty persists. For investors seeking security in turbulent times, gold remains a preferred option.
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