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

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.