Gold hits record as silver surges on outlook for Fed rate cuts

3rd April 2024 By: Bloomberg

Gold hits record as silver surges on outlook for Fed rate cuts

Gold held near a fresh record and silver hit a two-year high as two Federal Reserve officials said they still expect the US central bank to cut rates three times in 2024, buoying the outlook for the precious metals.

Bullion rose to a fresh peak above $2 288 an ounce before trading little changed, while silver topped $26 an ounce. San Francisco Fed President Mary Daly and Cleveland counterpart Loretta Mester — both of whom vote on policy decisions this year — said three reductions were likely over 2024, although there’s no urgency. Lower rates benefit the non-yielding metals.

Gold has climbed by almost 11% this year, hitting a procession of records in the process, on expectations that lower US interest rates are on the horizon. Still, data showing the US economy remains robust have cast some doubt over the probable timing of any reductions by the Fed.

A fall in open interest suggests short-covering may have contributed to gold’s recent record, according to Suki Cooper, an analyst at Standard Chartered. The absence of a new catalyst driving the metal higher “makes price action more likely to be choppy and prone to corrections,” she said.

Fed Chair Jerome Powell is scheduled to speak later on Wednesday, potentially offering fresh insights into his policy outlook. At the end of the week, nonfarm payrolls figures will also be scrutinized, with healthy employment gains expected, according to a Bloomberg survey.

Spot gold was steady at $2 281.29 an ounce at 9:52 a.m. in Singapore, after touching $2288.40. Silver climbed to $26.34 an ounce, the highest intraday level since March 2022. Platinum and palladium were flat, while the Bloomberg Dollar Spot Index was steady.