Gold firms on hopes for Fed rate cut in June, softer US dollar

GOLD prices edged higher on Monday (Mar 25) as renewed bets that the US Federal Reserve would begin cutting interest rates in June and a softer US dollar lifted bullion’s appeal.

Spot gold was up 0.1 per cent at US$2,166.39 per ounce, as at 0648 GMT. US gold futures climbed 0.4 per cent to US$2,167.70 per ounce.

The US dollar was down 0.1 per cent against its rivals, making gold less expensive for other currency holders.

“The environment is still looking quite healthy for the precious metal markets,” said Tim Waterer, chief market analyst at KCM Trade.

“Markets are still looking forward to impending rate cuts from the Fed. Looks like June is being the most probable time when they are sort of expected to pull the trigger on that first rate cut.”

Gold prices rose to an all-time high on Thursday after Fed policymakers indicated they still expected to reduce interest rates by three-quarters of a percentage point by the end of 2024 despite recent high inflation readings.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

Lower interest rates reduce the opportunity cost of holding bullion.

Traders are now pricing in a 74 per cent probability that the Fed will begin cutting rates in June, according to the CME Group’s FedWatch Tool.

Investors are now awaiting US core personal consumption expenditure (PCE) price index data due on Friday to see if that could alter the Fed’s projections of three rate cuts for this year.

The index was seen rising 0.3 per cent in February, which would keep the annual pace at 2.8 per cent. Many markets are closed this week for Good Friday when the PCE data is due for release, so the full reaction is expected to be seen next week.

Spot gold may break support at US$2,161 per ounce, and fall into a US$2,147 to US$2,152 range, said Reuters’ technical analyst Wang Tao.

Spot silver eased 0.1 per cent to US$24.62 per ounce, platinum rose 0.2 per cent to US$896.23 and palladium climbed 0.8 per cent to US$993.37. REUTERS