Gold hits highest level since March 2022, above $2,000/0z

Bengaluru — Gold prices edged higher on Wednesday to touch their highest levels since March 2022 after weak US economic data spurred safe-haven demand and expectations that the Federal Reserve might loosen its monetary policy trajectory.

Spot gold was up 0.1% at $2,022.09/oz, as of 3.55am GMT. Earlier in the session, bullion was closing in on record highs seen in 2020. US gold futures were steady at $2,038.90. The dollar index hovered near two-month lows, making bullion cheaper for buyers holding other currencies.

“Gold could continue to tear to the upside,” given a slowing global economy with high inflation, with the weakness in the US dollar allowing gold to “leap higher,” said Clifford Bennett, chief economist at ACY Securities.

Gold prices rallied 2% to cross $2,000/oz on Tuesday after another round of weaker US economic data pointed to a slowing economy. Data showed US job openings in February dropped to the lowest level in nearly two years, suggesting the labour market was cooling. A separate report showed new orders for US-manufactured goods fell for a second straight month in February.

Gold is traditionally considered a hedge against inflation and economic uncertainties, but higher interest rates dim the appeal for non-yielding bullion.

Metals firm MKS PAMP, in a note, flagged a higher risk of future bank failures and weaker economic activity as credit availability and financial conditions tighten amid a sticky inflation backdrop, which are “positive gold drivers”.

The Fed is expected to be finished raising interest rates, and is expected to start cutting them in the next few months. But Federal Reserve Bank of Cleveland president Loretta Mester said while the economy appeared on a path towards slowing down, the US central bank probably had more rate hikes ahead of it. Spot silver edged up 0.1% to $25.03/oz, while platinum gained 0.5% to $1,022.58 and palladium rose 0.3% to $1,461.42. Trade was thinned by holidays in China and Hong Kong.

Reuters