Gold Prices Stagnate as Investors Anticipate Rate Cuts

On Tuesday, gold prices remained steady as investors largely factored in an anticipated rate cut from the US Federal Reserve.

Gold reached a seven-week high last Friday, buoyed by a weaker dollar, expectations for lower interest rates, and safe-haven demand amid geopolitical unrest. Silver, on the other hand, achieved a record high.

By 0945 GMT, spot gold increased by 0.7% to $4,311.73 an ounce, marking its highest level since October 21. For the week, it was poised for a 2.7% rise.

US gold futures also gained 0.7%, reaching $4,343.50.

The dollar lingered near a two-month low, experiencing a third consecutive weekly decline, which made gold more accessible to overseas buyers.

Zane Vawda, an analyst at OANDA Market Pulse, noted that “a sharp rise in weekly U.S. unemployment claims and tensions between the U.S. and Venezuela are bolstering gold, with demand for security remaining robust.”

Last week, new jobless claims in the US rose significantly—the largest increase in nearly four and a half years—after a sharp decline the previous week.

On Wednesday, the Federal Reserve cut interest rates by 25 basis points for the third time this year, but expressed caution regarding further cuts.

Currently, investors are anticipating two additional rate cuts next year, and the upcoming US non-farm employment report could shed light on the Fed’s potential policy moves.

Non-yielding assets like gold tend to thrive in low interest rate conditions.

In terms of geopolitical issues, the US is preparing to intercept more ships carrying Venezuelan oil after seizing a tanker earlier this week.

Meanwhile, gold discounts in India widened this week due to a drop in demand, surprising during the wedding season, while high spot prices curbed interest in China.

Spot silver increased by 0.5% to $63.87 per ounce after reaching a record high of $64.32, and was looking at a 9.5% weekly gain.

This year, silver prices have more than doubled, driven by strong industrial demand, dwindling inventories, and its inclusion on the U.S. Critical Minerals List.

Ole Hansen, head of commodity strategy at Saxo Bank, remarked, “Silver is backed by industrial demand amid concerns of shortages, while ongoing market tightness and a surge in retail investor interest are pushing money into silver ETFs.”

In other markets, platinum rose by 0.8% to $1,708.11, and palladium climbed by 2.2% to $1,516.95, with both metals heading for weekly gains.