The prices of gold They rose on Wednesday, December 27 and were around their highest level in almost three weeks, given market expectations that the Federal Reserve (Fed) will begin cutting interest rates in the first quarter of 2024.
At 0934 GMT, spot gold was up almost 0.1% at $2,068.59 an ounce, on track to post a gain of more than 13% this year, the best since 2020. Gold futures in The United States advanced 0.5%, to US$2,079.90.
“There are a lot of ifs and buts, permutations and combinations, but the fact is that no matter what happens, the Fed is not going to raise rates again (…) it is the base case (for gold)”said Kunal Shah of Nirmal Bang Commodities in Mumbai. “In our opinion, the increase is ruled out and, with the gradual improvement of the situation, the market is beginning to bet on a reduction,” he added.
A report from the US Department of Commerce showed on Friday, December 22, that underlying inflationary pressures continue to decline. This cooling confirmed analyst expectations that the Fed will lower rates in March, with a probability close to 80%, according to CME’s FedWatch tool.
The decline in rates It reduces the opportunity cost of holding bullion, which does not earn interest.
Gold prices were also supported by an index of the dollar which remained near five-month lows, on the verge of its worst annual drop since 2020, and accumulated a decline of around 2% so far this year. A weaker greenback adds to the bullion’s appeal to holders of other currencies.
In other precious metals, spot silver fell 0.4% to US$24.09 an ounce, on track to close the year with a marginal gain of around 0.5%.
Platinum rose 0.2% to $980.18 and palladium rose 1.5% to $1,192.12. Both are set to post annual declines, with palladium losing nearly 34% in 2023, its worst decline since 2008.
With information from Reuters.
Source: Larepublica
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