Gold Hits Record, Silver Surges: Fed Rate Cut Outlook

Two officials of the US Federal Reserve stated that they are still estimating a trio of rate cuts in 2024. If the rates are cut, non-yielding precious metals can gain from this significant opportunity.

The prognosis for precious metals was improved when two Federal Reserve officials stated they still anticipate the US central bank to lower rates three times in 2024. Gold maintained close to a new record, while silver reached a two-year high. Silver reached above $26 an ounce, but gold reached a new high above $2,288 before trade.

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The two Feds, Mary Daly, San Francisco Fed President, and Loretta Mester, Cleveland counterpart, voted on policy decisions earlier this year and spoke about the three reductions. However, they said there was no urgency.

A wave of record highs has been reached by gold this year, thanks to forecasts of impending lower US interest rates. The precious metal has increased by over 11%. However, information indicating that the US economy is still strong has raised questions about when the Fed would likely start cutting the rates.

Suki Copper, Standard Chartered Plc Analyst, said, “A fall in open interest suggests short-covering may have contributed to gold’s recent record. The absence of a new catalyst driving the metal higher makes price action more likely to be choppy and prone to corrections.”

Today, Jerome Powell, Fed Chair, is expected to talk about his fresh insights on the policy outlook. Moreover, according to a survey done by Bloomberg, nonfarm payroll figures will be under scrutiny, and there can be healthy employment gains expected by the end of this week.

At 9.52 a.m. in Singapore today, the gold prices were steady at $2,281.29 per ounce after touching $2,288.40. Silver, on the other hand, reached $26.34 per ounce, the highest since March 2022. Different metals, palladium, and platinum, were flat, and the Bloomberg dollar spot index was also reported steady.

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Effect on Gold Prices in India

Gold Rate Today hit a record high, while silver prices also significantly increased. Silver Rate Today was 1.24% higher at ₹77,990 per kg, while the MCX gold rate was trading 0.65% higher at ₹69,375 per 10 grams.

As per Ajay Kedia, Kedia Advisory Director, "Gold price rose to a fresh record high as demand from momentum-following funds offset a strong US dollar and the possibility of higher-for-longer US rates. Safe-haven demand amid escalating geopolitical tensions and Russia - Ukraine conflict also supported bullion prices."

The prices of gold and silver are expected to remain volatile before the speech of Jerome Powell, US Federal Reserve Chairman.

To Summarize

The extraordinary rise in gold and the sharp increase in silver are indicators of market confidence brought on by anticipations of impending rate reduction by the Federal Reserve. This forecast highlights investors' faith in precious metals as investments that provide a safe haven in an uncertain economic environment. The rally highlights a critical moment when monetary policy decisions substantially impact asset prices and market mood, indicating changes in general economic paradigms.