Gold prices remained close to a two-month high on Monday, supported by rising expectations of interest rate cuts in June.
Spot gold experienced a 0.09 percent increase, recording $2,084.71 per ounce as of 7:09 GMT. Spot gold continued to hover near Friday’s peak of $2,088.19, which marked its highest level since December 28. On the other hand, U.S. gold futures saw a 0.09 percent decrease to $2,093.80.
In Saudi Arabia, twenty-four-carat gold was priced at SAR272 per gram, while 22-carat stood at SAR251 per gram.
Factors driving gold rally
The main driver behind the recent surge in gold prices is softer U.S. economic readings, which have solidified expectations of an interest rate cut by the Federal Reserve in June. Gold prices rose about $50 last week due to poor U.S. manufacturing and construction spending data and easing price pressures.
Analysts suggest that the narrative surrounding the Fed’s monetary policy has shifted towards the possibility of interest rate decreases, prompting investors to seek refuge in gold. Moreover, they highlighted the significance of interest rate dynamics in driving gold prices higher.
Traders have responded to the evolving economic landscape by increasing their bets on a June rate cut. The likelihood of an interest rate cut in June now stands at 74 percent, compared to approximately 65 percent the previous week, according to LSEG’s interest rate probability app. This heightened expectation has further bolstered gold’s appeal as lower interest rates enhance the attractiveness of non-yielding assets like gold.
The gold market now awaits the next major U.S. economic release, February’s employment report, which is due on Friday.
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Precious metals market
The impact of shifting interest rate expectations extends beyond gold prices to other precious metals as well. Spot platinum experienced a 0.6 percent decline to $881.22 per ounce. Meanwhile, palladium remained steady at $955.71. Both metals have seen significant declines of more than 10 percent since the beginning of the year, reflecting broader market sentiment influenced by monetary policy outlooks and economic indicators. Moreover, spot silver fell 0.6 percent to $23.01.
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