The gold market saw a notable increase, reaching its highest level in a week on Thursday. The rise is largely attributed to weaker U.S. economic data, which reinforces expectations of a reduction in interest rate by the Federal Reserve (Fed) this year.
Also read: The Fed could tip gold prices, watch out!
Gold numbers on the rise
THE spot gold price rose 0.3%, reaching $2,333.62 an ounce at 03:29 GMT, marking its highest level since June 12. U.S. gold futures, meanwhile, were flat at $2,347.30.
Today, the price of a gram of 18-carat gold is estimated at €70.16 (06/20/2024) (prices constantly changing).
A chief market analyst expressed a positive opinion on the development of the gold market, pointing out that the current position on the interest rate curve, located at its peak, is a favorable factor. According to him, the gold market seems to want to consolidate its recent gains rather than aiming for a higher level at this stage. Additional evidence of weakening US macroeconomic data, however, could change this outlook.
Impact of economic data
Recent data showed a moderation in the labor market and less pressure on prices, followed by disappointing retail sales on Tuesday, indicating lackluster economic activity in the second quarter. The Fed is now seeking further confirmation of slowing inflation as it cautiously considers one or two rate cuts by the end of the year.
A reduction in interest rates would lower the opportunity cost of holding bullion, which could further boost the gold market.
Forecasts and volatility
Analysts remain optimistic, despite mixed comments from Fed officials that could cause short-term volatility. They maintain a positive forecast for gold, with a price target of $2,500 per ounce by the end of 2024.
For now, market attention turns to weekly US unemployment data, due at 12:30 GMT, as well as flash Purchasing Managers’ Indices due on Friday.
Performance of other metals
L’spot money also rose 1.3%, reaching $30.13 per ounce. THE platinum rose 0.2% to $982.05, while the palladium gained 0.4%, reaching $908.28.
In conclusion, forecasts of interest rate cuts by the Fed play a crucial role in increasing gold prices, reflecting a market reaction to weak economic data. This trend, supported by optimistic forecasts from analysts, could continue in the coming months.
