Gold prices experienced an uptick on Tuesday, driven by the anticipation of interest rate cuts in 2024 from the Federal Reserve, with investors eagerly awaiting a barrage of economic data throughout the week to gain further insights into the U.S. rate outlook.
As of 0350 GMT, spot gold showed a 0.3% increase, reaching $2,069.19 per ounce. Simultaneously, U.S. gold futures also climbed by 0.3% to $2,078.10 per ounce.
Kelvin Wong, a senior market analyst for Asia Pacific at OANDA, noted, “The short-term bullish trend in gold still remains intact above the key support level of $2,017 per ounce.”
In 2023, bullion prices recorded a 13% gain, marking their first annual increase since 2020. The optimism stemmed from expectations that the U.S. central bank might consider interest rate cuts as early as March, boosting demand for the safe-haven asset.
Investor attention now turns to the upcoming minutes from the last Federal Reserve meeting scheduled for Thursday, seeking more insights into potential rate cuts this year. Wong from OANDA highlighted the shift in tone during the December FOMC meeting, emphasizing the importance of clarity on the dovish tilt and what factors Fed officials are monitoring.
Market expectations currently reflect an 86% likelihood of rate cuts from the Fed in March, according to the CME FedWatch tool. Lower interest rates diminish the opportunity cost of holding non-yielding assets like gold.
Additionally, the focus remains on U.S. data regarding job openings and December non-farm payrolls, which will provide further clarity on the Fed’s rate path.
From a technical perspective, Reuters analyst Wang Tao suggests that spot gold may revisit support at $2,062 per ounce, and a breach below could potentially lead to a further decline towards $2,053.
In the broader precious metals market, spot silver registered a 0.8% increase to $23.94 per ounce. However, platinum and palladium experienced marginal declines of 0.1%, with platinum at $986.29 and palladium at $1,097.56.
