Gold prices witness surge amid speculation of U.S. interest rate adjustments

5/27/2024 5:32:26 AM

(MENAFN) In the early hours of Monday trading, Gold prices saw an upward trend following a dip to their lowest levels in two weeks during the previous session. This movement came as traders weighed the likelihood of potential adjustments to US interest rates in light of forthcoming economic data releases later in the week.

Spot gold prices experienced a 0.4 percent increase to USD2,342.73 per ounce by 0543 GMT after reaching a low of USD2,325.19 on Friday, marking their lowest point since May 9. Concurrently, US gold futures also rose by 0.4 percent to USD2,343.60.

Despite recently hitting a record high of USD2,449.89, gold has seen a decline of over USD100 since that peak. Matt Simpson, chief analyst at City Index, shared insights suggesting a potential uptick in gold prices before potentially retesting the USD2,280 to USD2,300 range. However, continued losses might occur if upcoming US data continues to outperform expectations.

Investor attention remains focused on key economic indicators, particularly the core personal consumption expenditures price index, slated for release on Friday. This index, regarded as the Federal Reserve's preferred gauge of inflation, holds significant influence over monetary policy decisions.

Recent minutes from central bank meetings highlighted a potential delay in reaching the Fed's target inflation rate of two percent. This observation has fueled speculation regarding the timing and extent of any future interest rate adjustments.

Market sentiment, as reflected by the CME Fed Watch tool, indicates mounting skepticism regarding the likelihood of multiple interest rate cuts by the Federal Reserve in 2024. Currently, market expectations suggest a 62 percent probability of an interest rate cut by November.

In parallel movements, other precious metals also saw gains during spot transactions: silver rose by 1.6 percent to USD30.83 per ounce, platinum increased by 1.4 percent to USD1,040.25 per ounce, and palladium gained 1.4 percent to reach USD976.72 per ounce. These fluctuations underscore the intricate interplay between economic data, central bank policy, and investor sentiment in shaping the trajectory of precious metal prices.

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