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Gold Gained on Thursday as COVID-19 Variant Spreads

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Gold, the world’s number one safe-haven asset, rose by 0.3 percent to $1,774.39 per ounce on Thursday amid rising concerns over the spread of the Delta coronavirus variant.

The precious metal moved further away from a two-month low hit on Tuesday, gold might have called the bottom for the bearish trend started when the U.S Fed announced possible rates increase in 2023.

Rising cases of the Delta variant have prompted France to delay the easing of restrictions in the Landes region, while infections have also surged in Asia.

If the rise of the variant forces authorities to introduce new lockdowns, especially in Europe and the United States, then we may be looking at the risk-averse safe haven trade offering support to gold, Ricardo Evangelista, a senior analyst at ActivTrades.

Also on investors radar is Friday’s U.S. nonfarm payrolls that could provide more clues on timeline for Fed’s shift in monetary policy. The weekly jobless claims data is due later on Thursday.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Gold

Gold Edges Upward as Traders Anticipate 2024 Fed Rate Cuts and Weaker US Dollar

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Gold prices experienced a modest uptick as traders set their sights on potential interest rate cuts from the Federal Reserve in 2024 and a weakened US currency.

The precious metal, currently hovering near a record high, is on track to mark its first annual increase in three years.

This surge follows recent data illustrating a softening of US price pressures, reinforcing expectations among investors for multiple rate cuts in the coming year.

A report from the previous week revealed that the Federal Reserve’s preferred measure of underlying inflation showed minimal growth last month, falling short of the policymakers’ 2% target by one measure.

The outlook for gold has become even more optimistic, with swaps markets indicating an over 80% probability of a rate cut by March 2024.

Such a scenario would be particularly bullish for non-interest-bearing assets like gold, despite some central bank officials expressing reservations about the prospect of early easing.

As of 6:33 a.m. London time, gold rose by 0.6% to reach $2,064.45 per ounce, building on a 1.7% gain from the previous week. Bullion had previously closed at a historic high of $2,072.22 on December 1.

Concurrently, the Bloomberg Dollar Spot Index experienced a marginal 0.1% decline. Silver and palladium also saw gains, while platinum maintained a steady position.

This positive momentum suggests that gold continues to be an attractive option for investors seeking a hedge against potential economic uncertainties, especially amid expectations of Federal Reserve intervention in the form of rate cuts in the coming year.

The precious metal’s resilience and upward trajectory underscore its status as a haven asset in times of monetary policy adjustments and currency fluctuations.

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Gold Plunges as Recession Fear Disrupts Global Market

Gold, the world’s leading haven asset, plunged with global uncertainty as investors continued to accumulate Dollars ahead of the inevitable recession.

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Gold, the world’s leading haven asset, plunged with global uncertainty as investors continued to accumulate Dollars ahead of the inevitable recession.

In a recession, cash is the king. Hence, while global investors prefer to save in dollars, especially with borrowing costs on the rise and the Federal Open Market Committee (FOMC) expected to raise interest rates by another 50% to 75% basis points in the month of July.

The U.S Dollar rose to a 20-year high this week and is expected to continue in the near term as I do not see demand for the greenback abating anytime soon given the severity of global risks and uncertainty.

The price of gold dropped from $1814.19 per ounce it peaked on Monday to $1732.14 on Wednesday before slightly paring losses to $1743.74 at 10:36 am Nigerian time on Thursday.

“Gold’s price reaction has been rather muted as it had already started to price in a rising probability of another sharp rate hike in July,” said Suki Cooper, an analyst with Standard Chartered.

“In recent sessions, gold has succumbed to the risk-off sentiment as the dollar has benefited.” Risk-off is when traders and investors reduce their exposure to risk and concentrate on protecting their capital.

According to Tai Wong, an independent metals trader based in New York, rising interest rates means holding the dollar at no additional interest rate is better.

He said, “The hawkish Fed minutes which suggested an ‘even more restrictive stance’ provided no relief for metals markets.”

“While a short-covering rally is possible if payrolls are soft, a lasting upturn (for gold) will require a softer U.S. CPI reading next week. That’s needed to pull the Fed back from launching another massive tightening volley,” Wong added.

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Price of Gold Rises Above $2000 as Ukraine War Continues

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A report by Mining Weekly reveals that the price of gold scaled the $2000-level for the first time in over a year on Monday, 7th March. This update is coming up in the wake of the Russia-Ukraine crisis.

According to the report, Spot gold has moved up 0.9% at $1 986.83 per ounce after scaling to its highest since August 19, 2020 at $2 000.69 earlier in the day. Also, the report reveals that US gold futures rose 1.3% to $1 992.00.

Speaking about the rise in price, currency strategist at DailyFX said: “If this was risk aversion driven by the US Federal Reserve as seen ahead of this war, that wasn’t something that lifted gold as that risk aversion was about rising rates, which is not an environment in which gold does well. This risk aversion, however, is geopolitical, and so there seems to be a reflective demand for non-paper assets.”

The effects of the war have been felt for over two weeks with many trading commodities affected the most starting with the price of oil.

The fighting has affected so many people with reports showing how people are struggling to evacuate many besieged Ukrainian cities.

Russian President Vladimir Putin has also vowed to press ahead with his invasion unless Kyiv surrendered. However, reacting to Vladimir’s invasion are sanctions that have been served Russia from the international communities – sanctions that are also affecting the market one way or another.

Reports also reveal that holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.4% to 1054.3 tonnes on Friday, 4th March – the highest recorded since mid-March 2021.

Experts also project that Spot gold may keep rising towards $2065 per ounce. Palladium has also risen up 4.3% at $3 130.16 per ounce, after hitting an all-time high of $3 172.22 earlier within this period.

It is also interesting to note that Russia accounts for 40% of the global production of auto-catalyst metal. A metal used by automakers in catalytic converters to curb emissions.

Speaking on the sanctions and how they may affect the world, Spivak said: “We’re looking at a very significant pick-up in concerns around the disruptions with Ukraine seemingly because the conflict is showing signs of broadening.”

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