Gold prices rose by another 0.3%, continuing the recent rally and approaching the record level reached on December 4, 2023. Gold is supported by increased expectations of easing the Fed's monetary policy at the June meeting. Meanwhile, a certain pressure on prices is exerted by the strengthening of the US currency.
Investors are also preparing for a speech by the head of the Fed and the publication of data on the US labor market, which will provide clues about the state of the US economy and the potential timing of Fed rate cuts. Powell will testify before lawmakers on Wednesday and Thursday. Economists expect Powell to be patient again and emphasize that there is no need to rush to lower interest rates. Yesterday, the head of the Federal Reserve Bank of Atlanta, Rafael Bostic, said that the Fed is not under pressure to urgently cut rates, stressing the "thriving" economy and the labor market. According to the CME FedWatch Tool, markets see a 22.0% probability of a 25 basis point rate cut at the Fed meeting in May, and a 66.9% probability of a rate cut in June.
Meanwhile, data showed that SPDR Gold Trust's holdings dropped 10% from the previous year as of March 4. However, experts warned that the pace of sales was reasonably measured, which suggests that these are changes in the composition of the investment portfolio, and not that investors necessarily lose faith in gold.