Gold shines on hopes of a cut in US interest rates this year

On Thursday, gold continued its upward trajectory for the fourth consecutive day as investors maintained optimism regarding potential interest rate cuts by the Federal Reserve. Despite the central bank ruling out rate cuts in March, market participants still anticipate significant reductions later in the year.

In spot transactions, gold recorded a 0.5% increase, reaching $2,046.63 per ounce by 0355 GMT. The metal had surged to its highest level in over two weeks at $2,055.89 on Wednesday before moderating gains to close the session with a 0.1% increase. Meanwhile, US gold futures experienced a slight decline of 0.2%, settling at $2,064.10.

Jigar Trivedi, Chief Analyst at Reliance Securities, highlighted that the Federal Reserve’s confidence in achieving the 2% inflation target and its openness to potential interest rate cuts, albeit not in March, provided ongoing support for gold.

The Federal Reserve’s decision to keep interest rates unchanged for the time being and dismiss rate cuts in the spring contributed to the positive sentiment for gold. The removal of a long-term reference to possible increases in borrowing costs also influenced market dynamics.

Concerns surrounding regional US bank New York Community Bancorp have heightened, prompting increased interest in safe-haven assets like gold and US Treasuries. Benchmark 10-year Treasury yields are hovering near their lowest levels in more than two weeks.

Additional factors influencing the precious metals market include data revealing that US private sector job growth in January fell short of expectations. Investors are now eagerly awaiting the release of the January non-farm payrolls report scheduled for Friday.

In the broader spectrum of precious metals, silver saw a 0.4% increase in spot transactions, reaching $23.01 per ounce. Platinum experienced a marginal 0.1% rise, reaching $918.55, while palladium recorded a 0.2% increase, reaching $978.50.