Gold on Track for Fourth Weekly Gain Amid Fed Rate-Cut Hope

Gold prices rose on Friday, heading for a fourth weekly gain in five weeks, amidst economic uncertainty and market volatility. This increase was driven by the U.S. Federal Reserve's decision to maintain its projections for interest rate cuts throughout the year boosting investor confidence.

Quick Update About Gold Price

Current Gold Price: Spot gold saw a modest uptick of 0.1% reaching $2,183.93 per ounce as of 0117 GMT after hitting an all time high the previous day. Bullion has registered a 1.3% increase over the week. Similarly, U.S. gold futures also rose 0.1% reaching $2,186 per ounce.

Fed's Stance on Interest Rates: Federal Reserve decided to keep interest rates unchanged on Wednesday. However policymakers suggested they still planned to lower rates by three quarters of a percentage point by the end of 2024, despite recent reports of high inflation. Fed Chair Jerome Powell mentioned that although inflation has been high recently it hasn't altered the overall trend of gradually reducing price pressures in the United States.

Impact of Interest Rate Changes: When interest rates decrease, gold which doesn't offer interest payments tends to do well because lower interest rates make holding gold more attractive since the opportunity cost of holding it decreases.

Market Expectations: According to the CME Group's FedWatch Tool traders in the Fed funds futures market are now estimating a 74% chance that the Federal Reserve will start reducing interest rates in June.

Global Economic Sentiment: Meanwhile, the Bank of England opted to maintain borrowing costs unchanged on Thursday but hinted at a potential shift towards interest rate cuts as the economy navigates uncertainties.

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U.S. Economic Indicators: Recent economic data from the United States revealed a surprise drop in new claims for unemployment benefits and there was an increase in the sales of existing homes in February marking the highest surge in a year.

Dollar Strength: The dollar got stronger after the Swiss National Bank unexpectedly lowered interest rates. This made people feel more confident about taking risks globally and showed that the dollar is still attractive because the U.S. economy is doing well.

Other Precious Metals: Spot silver remained flat at $24.77 per ounce while platinum faced a slight dip of 0.3% to $904.95 and palladium eased by 0.1% to $1,009.21 per ounce.

To Sumarize

The reaction of the gold market to the Federal Reserve's position on interest rates highlights how various factors like economic data, market feelings and geopolitical issues influence the direction of gold prices worldwide.