Gold moved higher on Thursday with investors expecting some greater clarity Joe Powell’s comments on the Fed’s interest rate policy during his speech, while palladium “missed” $1,000 per ounce for the first time since 2018.
The message that her work Fedas far as the inflation “front” is concerned, is probably not over, the head of the Federal Reserve issued Jerome Powell on a panel of the International Monetary Fund (IMF), leaving open again the “window” for a new increase of interest rates. In this context, he emphasized the need for the Fed to follow a careful approach, so as not to be “misled” by some good data, but also not to be led to “excessive tightening”.
Spot gold rose 0.7% to $1,963.49 an ounce, after hitting its lowest level since Oct. 18 earlier, while U.S. futures gained 0.6% to $1,968.90.
Silver rose 1.1% to $22.77 an ounce.
Palladium fell more than 5% to $996.67 an ounce after hitting a 2018 low of $991.53
“Today’s move in gold is just a case of the dollar and there is also a technical recovery as we come from an aggressive sell-off,” said Bart Melek, head of commodity strategies at TD Securities.
The dollar index was flat after rising 0.2% earlier.
“Gold could move above $2,100 in the second quarter of 2024, and the catalyst will be the Fed needing to start cutting interest rates,” Melek stressed.
Investors see a 90% chance the Fed will leave interest rates steady in December and about a 70% chance of at least one cut by June 2024, according to the CME FedWatch tool.
Lower interest rates boost gold’s appeal.
“In the near term, supply cuts have not materialized and demand has been lower than expected following the US auto workers’ strike.”