Daily Management Review

Gold Maintains Record Surge As Speculations On Rate Cuts Gather Traction


Gold Maintains Record Surge As Speculations On Rate Cuts Gather Traction
Autocatalyst palladium surged back above $1,000 for the first time since January 12, while gold reached a new high, building on excellent momentum primarily fueled by forecasts for U.S. monetary easing.
As of 2:03 p.m. ET (1903 GMT), spot gold was up 0.8% to $2,145.09 per ounce, having reached an all-time high of $2,152.09 earlier in the session.
At $2,158.2, U.S. gold futures ended the day 0.8% higher.
Silver reached $24.15, up 1.9%.
The dollar dropped and gold gained more momentum after Fed Chair Jerome Powell hinted at a rate cut later this year.
"Gold is likely to push higher as bullish sentiment remains dominant. However, bullion may take a little time to digest Powell's overall comments as well as see Friday's employment report," said Tai Wong, a New York-based independent metals trader.
When high interest rates in the United States push up returns on other assets like bonds and strengthen the dollar, gold is negatively impacted and becomes more expensive for buyers in other countries.
According to Michael Hsueh, an analyst for FX and commodities strategy at Deutsche Bank, "there's definitely been macro data that's pushed us in this direction and the follow-on to policy expectations from the Fed... but the response in the gold market has been multiples of what long-term fair value models suggest."
Traders now project a 70% possibility of a Fed rate cut in June.
According to Ryan McKay, senior commodity strategist at TD Securities, "funds are holding roughly 80% of their historic max long position in gold, indicating that CTAs are firing long on all cylinders."
The London Bullion Market Association reported that during an afternoon auction, the benchmark for London's gold prices reached an all-time high of $2,142.85 per troy ounce.
Palladium increased by about 10% to $1,035.83, while platinum increased by roughly 3% to $906.70 per ounce.
According to Bart Melek, head of commodity strategies at TD Securities, palladium appears to have drawn another round of "big buying" from funds, some of which was extremely technical.
Melek continued, "A waning appetite for EVs might also be a lifeline."