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March 3, 2024
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Gold prices post modest gains as U.S. dollar weakens

Gold prices recorded a modest increase on Thursday, buoyed by a softening U.S. dollar and a decline in Treasury yields. 

As of 01:21 GMT, spot gold had risen by 0.2 percent to $2,010.59 per ounce. It recovered slightly after dropping to $2,001.72 on Wednesday, which marked its lowest point since December 13. Concurrently, U.S. gold futures experienced a 0.3 percent increase, reaching $2,012.40.

Other precious metals also witnessed gains. In particular, spot silver rose by 0.4 percent to $22.61 per ounce. Meanwhile, platinum increased by 0.2 percent to $885.38. Additionally, palladium saw a significant jump of 1.2 percent, reaching $926.54.

Modest gains

These modest gains in gold prices follow the decline of 0.2 percent in the U.S. dollar index. As the dollar softened, gold (which is priced in the said currency) has subsequently become more affordable for holders of other currencies. 

Additionally, yields on the U.S. 10-year Treasury notes fell, further supporting the uptick in gold.

Despite this slight increase, gold remained close to its five-week low. Investors are also cautiously reassessing their expectations for interest rate cuts following hawkish remarks from central bank officials.

Atlanta Fed President Raphael Bostic is slated to speak at two events later today. Bostic recently warned against premature rate cuts, suggesting that such actions could destabilize the inflation trajectory toward the Fed’s 2 percent target.

Currently, money markets expect the Federal Reserve (Fed) to reduce interest rates by 142 basis points this year, with a 61 percent likelihood of a rate cut in March. 

Read: Indicators suggest gold will maintain strength in 2024

Market forecasts

Looking at oil markets, OPEC maintained its 2024 demand growth forecast at 2.25 million barrels per day (bpd). Meanwhile, North Dakota, a leading U.S. oil-producing state, reported a significant drop in oil output due to extreme cold temperatures, with production falling by 650,000 to 700,000 bpd, less than half its typical output.

Later today, the U.S. government is also set to release data on oil inventories. Preliminary figures from the American Petroleum Institute indicated a rise in domestic crude stockpiles by 480,000 barrels last week.

Furthermore, despite Middle East tensions, the International Energy Agency (IEA) anticipates oil markets to be in a “comfortable and balanced position” in 2024. Speaking at the Reuters Global Markets Forum, IEA Executive Director Fatih Birol stated that this assessment is based on rising supply and a slowing demand growth outlook.

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