Gold Touches a New All-Time High Amid Rate Cut Optimism
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Last week, gold touched a fresh all-time high and achieved a weekly gain after the Federal Reserve reaffirmed three interest rate cuts for 2024. Thursday and Friday were the busiest in terms of this week’s calendar of economic events. Among the most anticipated eventswas the release of U.S. GDP and jobless claim data on Thursday, along with inflation numbers set for release on Friday. It was also a shortened trading week, as major markets in the U.S. were closed on Friday, in observance of Good Friday.
Gold started the week at $2,170 and firmed on Monday amid expectations that the Fed would cut interest rates, starting in June. Meanwhile, silver saw little change as the gray metal hovered near $24.65 an ounce, while equities took a breather following last week’s gains.
Tuesday marked the third consecutive session of losses for major Wall Street averages, following news that consumer confidence in the U.S. had dropped to a four-month low of 104.7, according to the Conference Board. Meanwhile, gold ended the day higher at $2,178 as the dollar and Treasury yields fell.
Stocks in the U.S. rallied on Wednesday, as investor sentiment was boosted as hopes of a soft landing for the U.S. economy permeated Wall Street. Treasury yields and the dollar slid again on Wednesday, which paved the way for gold to end the day 0.8% higher, at $2,197. On Wednesday night, Fed Governor Chris Waller addressed an audience at the Economic Club of New York and said that recent higher inflation readings and job momentum in the first quarter of 2024 support his stance that there is no rush to cut interest rates.
Despite Waller’s comments, there is still strong belief that the U.S. is headed into a rate cutting cycle, as the odds of a quarter-point rate cut in June are near 65%, according to the CME FedWatch Tool. Such optimism surrounding monetary propelled gold to a new all-time high of $2,232 on Thursday, for a 2.8% weekly gain. This also marked the yellow metal’s best monthly performance in over three years, with over a 9% uptick. Meanwhile, silver ended the week 1.2% higher and notched nearly a 10% gain at $24.98.
Despite a mixed week, the big three major averages would end the month and the quarter on a high note. At the end of Thursday’s trading, the Dow Jones Industrial Average and S&P 500 had closed at new respective all-time highs of 39,807.37 and 5,254.35. This marked the best two consecutive quarters for the pair in nearly four years.
This morning, the Commerce Department released inflation data which showed that prices in the U.S. increased again in February. While the Fed’s favored inflation gauge in the PCE price index and Core PE price both rose by 0.3% in February, these increases were largely in line with forecasts, which likely means that a June rate cut is still on the table. Meanwhile, markets await comments from Federal Reserve Chair Jerome Powell.
