Summary:
Gold neared a 7-month peak on Thursday amid speculation of a Fed rate cut in H1 2023, pressuring the dollar and Treasury yields.
Gold firmed near its highest in about seven months on Thursday as expectations that the Fed may cut interest rates by the first half of next year have weighed down the dollar and Treasury yields.
Investors will monitor the PCE data later in the day for further insights into the rate outlook. They will unlikely change the view of peak rates without a big surprise on the upside.
In the latest turnaround in a volatile year, global bonds are soaring at the fastest pace since the 2008 financial crisis. Markets price a full percentage point of reductions in the US and the eurozone next year.
A weekly JPMorgan Chase’s Treasury client survey found that the most active investors in the market are the most bullish they have been since the poll was initiated.
Dire economic outlook also adds to the appeal of the defensive asset class. The global economy is forecast to grow 2.9% this year, a Reuters poll showed, with next year's growth seen slowing to 2.6%.
Most economists have flagged possibilities of "mild recessions" in Europe while a soft landing for the US is still on the cards. inflation will cool at a slower pace as seen by policymakers, a tail wind for bullion.
The precious metal may need to hold above 2030 for the continuation of the bullish wave with a record high it hit in May around the 2080 level.
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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