Gold hit new record highs

Bengaluru — Gold prices rallied to hit new records on Thursday, on track for their seventh consecutive daily rise, led by weak US economic data and Federal Reserve chair Jerome Powell’s indications of potential rate cuts in the coming months if inflation eases.

Spot gold rose 0.5% to $2,159.79/oz at 4.32am GMT, after hitting a record high of $2,161.09 earlier in the session. US gold futures added 0.4% to $2,167.00.

The marginal weakness in US data gave gold a reason to rally, yet the magnitude of movement appears disproportionately large, possibly influenced by large futures buying that commenced on Friday, said Marcus Garvey, head of commodities strategy team at Macquarie.

Gold got a boost on Wednesday after Powell indicated that interest rate cuts were likely in the coming months “if the economy evolves broadly as expected”, along with further evidence of falling inflation. Powell will speak again later in the day.

Lower rates boost the appeal of non-yielding bullion.

Powell’s remarks, coupled with data released the same day indicating a softening of labour market conditions, resulted in US treasury yields and dollar sliding, increasing the appeal of gold.

If Friday’s labour market data or next week’s inflation data showed any weakness, $2,300 would be the short-term target based on technical levels, but that would be a short-lived phenomenon, before prices corrected and consolidated, Garvey said.

“We expect central bank buying to continue on the back of geopolitical uncertainty. Slowdown in China will keep global growth contained. Hence, in an uncertain financial environment, gold will remain safe investment for banks,” said Jigar Pandit, head of commodity and currency business at BNP Paribas’ Sharekhan. He cited strong demand primarily from China, Turkey, Russia, and Polland.

Spot silver rose 0.4% to $24.25, while platinum fell 0.1% to $906.82/oz, and palladium slipped 0.8% to $1,033.44.

Reuters