Gold seen firmer on softer US dollar as traders await Fed speakers

Following a decline in the US dollar and Treasury yields, gold saw a rise on Tuesday as traders braced themselves for statements from multiple Federal Reserve officials this week, which would likely provide insight into the rate of interest rate reductions this year.

Gold Firmer on softer US Dollar

As of this writing, spot gold was up 0.6% to $2,035.99 per ounce, after closing the previous session at its lowest level since January 25. US gold futures ended the day at $2051.4, up 0.4%.

Supporting zero-yield gold, benchmark U.S. 10-year Treasury yields dropped, and the dollar (.DXY) opened a new tab after declining 0.3%.

Fed Speakers Eyed

Speakers from the Fed are anticipated to restate their position that, despite the possibility that March is too early for a rate drop, more of the same from the inflation front is all that is needed to initiate the reducing cycle. The CPI data release the following week may serve as the impetus for gold prices to begin to firm up.

Analysts anticipate that gold will react favourably and that inflation will print softly. This week, at least eight Fed speakers are scheduled to speak. Following last week’s strong jobs report, traders have trimmed back and opened new tab bets on a US rate drop in March.

Stronger-than-expected US economic data has hit gold bulls hard, forcing them to review lower levels as markets keep reducing their expectations on a Fed rate decrease in March. A rise in gold is also anticipated as the first Fed rate cut approaches.

Still, the precious metal should unwind some of its recent gains in the interim if the Fed is forced to postpone the start of its policy pivot.

Palladium increased by 0.1% to $949.63, platinum gained by 0.6% to $902.34, while spot silver increased by 0.4% to $22.45 per ounce.

Outlook by yearend

Given the assumption that the US Federal Reserve will begin reducing interest rates later in the year, gold and silver are predicted to rise much higher in 2024. Even optimistic observers anticipate that by year’s end, the price of the yellow metal will reach $2,200 per ounce.