Having risen to a fresh all-time high of nearly $2,150 during Monday’s Asian session on rising expectations that the Federal Reserve could begin cutting interest rates next year, Spot Gold eased a bit, but continued holding above the $2,000 mark.
Market players added to bets that a rate cut could come in the months ahead, following cautious remarks delivered by Federal Reserve Chair Jerome Powell last week.
Markets are now pricing in a 70% chance of a Fed rate cut as early as March 2024, the CME’s FedWatch tool showed.
“We think the latest price rally is overdone,” ANZ Commodity Strategist Soni Kumari was quoted as saying by Reuters.
Yet, “technically, momentum is still looking strong after prices broke the resistance of $2,050/oz. Investors have been adding fresh long to position both against rising geopolitical tensions and rising prospects of Fed rate cuts.”
Lower interest rates translate into lower opportunity cost of holding Gold, which yields no interest.
As of 11:35 GMT on Monday Spot Gold was inching down 0.03% to trade at $2,071.44 per troy ounce. Earlier on Monday, the commodity went up as high as $2,148.99 per troy ounce – a new all-time high.
Gold Futures for delivery in February were inching down 0.01% on the day to trade at $2,089.40 per troy ounce.
Elsewhere, Silver Futures for delivery in March were losing 1.15% to trade at $25.560 per troy ounce.
Still, the yellow metal took a breather after the rally, as the US Dollar firmed slightly.
The US Dollar Index, which reflects the relative strength of the greenback against a basket of six other major currencies, was edging up 0.10% to 103.291 on Monday.
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