Gold soars to $2,300 as rate cut hopes fuel rally

Bullion surges past $2,300 as traders bet on Fed easing monetary policy.

Gold soars to $2,300 as rate cut hopes fuel rally

Gold jumped to fresh record highs on Thursday, with the precious metal trading north of $2,300 per ounce as Federal Reserve officials reinforced expectations of interest rate cuts in 2024, albeit with the timing still unclear. Traders also eyed key U.S. jobs data on the horizon.

Spot gold (XAU/USD) held steady at $2,297.23 per ounce as of 06:53 GMT, having earlier struck an all-time peak of $2,304.09 in the session. The rally reflected a broad weakening of currencies globally against the U.S. dollar, prompting investors to buy gold as a safeguard against local currency depreciation.

Despite gold's extended overbought conditions, sentiment remained firmly bullish with no immediate catalysts to trigger selling. The overriding mood in markets was to continue accumulating bullion.

US dollar retreats as rate cut expectations grow
US currency slides to one-week low as economic data bolsters predictions of Fed easing.

On Wednesday, Fed Chair Jerome Powell and other central bank officials stressed the need for further deliberation and economic data before pulling the trigger on rate reductions, even as financial markets priced in cuts from as early as June. More Fed policymakers, including Michelle Bowman and Thomas Barkin, are due to speak on Thursday.

Slowing growth in the U.S. services sector during March brightened the inflation outlook, bolstering prospects of monetary easing. However, the pivotal March nonfarm payrolls report, scheduled for Friday, and fresh inflation figures next week could sway the Fed's rate decision, with labour market tightness and sticky price growth key considerations.

Lower interest rates tend to boost gold's appeal by diminishing the opportunity cost of carrying the non-yielding asset.

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