#GoldPrices #FederalReserve #USFactoryData #ConsumerSentiment #InterestRateCuts #TreasuryYields #SpotGold #PreciousMetals
Gold prices surged nearly 1.5% to reach a two-month peak on Friday, fueled by less-than-stellar US factory data and a downturn in consumer sentiment. This increase in gold prices comes amid speculation that the Federal Reserve might lower interest rates towards the year’s end. As of 11:30 a.m. ET, spot gold had ascended more than 1.4%, hitting $2,075.03 per ounce, which is merely $60 shy of the record peak set in December 2023. Concurrently, US gold futures witnessed a 1.4% rise, reaching $2,083.70 per ounce.
Recent indicators highlight a sluggish US manufacturing sector, with a noticeable contraction in orders, production, and employment rates. This deceleration is further validated by new data showcasing a decline in US consumer confidence for the first time in three months, triggered by deteriorating views on both current and future economic conditions.
These economic signals have cemented the anticipation that the Federal Reserve will need to intervene by reducing borrowing costs to bolster the economy. Such speculations led to a drop in Treasury yields, consequently propelling gold to its most notable intraday gain since mid-January.
Comments from various Federal Reserve officials further influenced bond yields, thereby enhancing gold’s luster. Notably, Federal Reserve Governor Christopher Waller expressed a preference for increasing the central bank’s holdings of short-term Treasuries. Moreover, sentiments from Federal Reserve Bank of Chicago President Austan Goolsbee and his counterparts emphasized the restrictive nature of the current Fed funds rate and the market’s cautious approach towards anticipating rate cuts.
Amidst these economic and monetary fluctuations, analysts from JP Morgan have projected a bullish outlook for gold, forecasting that rate cut expectations and a weakening US dollar will drive the metal to unprecedented heights by 2025. Gregory Shearer, JP Morgan’s head of base and precious metals strategy, reinforced this optimism, expressing a strong confidence in a bullish gold market over the medium term.
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