Investors on edge as gold awaits key data releases

10 Apr 2024 , 10:55 AM

As investors watched the minutes from the U.S. Federal Reserve's policy meeting and key inflation statistics for clues on the timing and scope of interest rate decreases, gold prices dipped on Wednesday, remaining below a record high.

Spot gold set a record high of $2,365.09 on Tuesday; it was down 0.2% at $2,348.49 per ounce.

American gold futures increased by 0.2% to $2,366.60 an ounce.

Later in the day, the Fed's March policy meeting minutes and the U.S. CPI data are expected to provide insight into when the rate cuts—which are generally anticipated—will occur.

According to Atlanta Fed President Raphael Bostic, if inflation continues to decline and the economy continues to grow, it's likely that the US Federal Reserve won't lower interest rates at all this year.

According to a Reuters poll, bond strategists raised their projections for U.S. Treasury yields in the upcoming months as financial markets have been forced to reduce expectations for rate cuts by the Federal Reserve this year due to sticky inflation and robust economic growth.

Having non-yielding gold becomes less appealing when interest rates rise.

Due to strong demand from Chinese retail consumers and central banks, Bank of America (BofA) projects that by the fourth quarter of this year, the average price of an ounce of gold will be $2,500.

As worries about inflation increased in March, U.S. small-business optimism fell to its lowest point in almost 11 years, per a study.

According to a study by the European Central Bank, banks in the euro zone dropped the bar on mortgage approvals last quarter for the first time in more than two years, but credit demand continued to decline due to high borrowing rates and a stagnating economy.

A day ahead of significant inflation data, the Nasdaq and S&P 500 saw slight increases, led by financial stocks as investors got ready for the start of the U.S. bank earnings reporting season on Friday.

Spot silver dropped 0.5% to $28.01 per ounce, palladium dropped 0.5% to $1,087.39, while platinum slipped 0.3% to $975.85.

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