Summary:
Gold hit a new high on Friday, set for the best month in 3+ years, driven by rate-cut expectations and safe-haven demand.
Gold prices reached a new record high on Friday and headed for their best month in over three years, propelled by rate cut expectations and safe-haven demand.
Traders are currently pricing in a 64% chance of a June rate cut, according to CME’s FedWatch tool. Gold bulls cheer a relatively dovish Fed though the scale of potential loosening has been dialed back so far.
Chair Jerome Powell made clear last week that he was no longer singularly focused on crushing inflation. He signaled enough progress has been made on that front.
Forecasters in the CNBC Fed Survey are increasingly confident that the US economy will avoid a recession and pull off a soft landing and do not see growth slowing much over the next few years.
Respondents still see three cuts this year, on average. They never became as euphoric as futures markets so the expectation could be more likely tilted towards the downside.
Goldman Sachs continues to hold a constructive view on bullion with its year-end forecast of $2,300 as policy pivots should crucially reactivate the largely dominant ETF buying.
Gold has gained around 8% in 2024. RSI suggests “chase mode” could risk some losses from profit-taking. Support is now seen around $2,160 area.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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