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Gold jewellery | Image:Pixabay
As the final week of the year brings muted trading activity, gold prices steadied on Wednesday, maintaining their position near two-week high hit on Friday. The precious metal is poised to secure its best performance in three years, with expectations of a Federal Reserve rate cut in the first quarter of 2024 contributing to its appeal.
Spot gold witnessed a marginal 0.1 per cent dip to $2,064.79 per ounce but remains close to the recent peak of $2,070.39. Bullion is on track to achieve 10 per cent gain for the year, marking its strongest performance since 2020.
In the futures market, US gold futures saw a 0.3 per cent rise hitting $2,076.00 per ounce.
Jigar Trivedi, a senior analyst at Reliance Securities, highlighted that gold’s primary support comes from the widespread expectation of a US interest rate cut in the coming year. However, thin trading volumes are anticipated to keep spot gold within a range of $2,050 to $2,070 on Wednesday and Thursday.
The recent release of cooler US inflation data has bolstered market expectations for a Federal Reserve interest rate cut in March 2024. Traders are currently pricing in an approximately 80 per cent chance of such a move, according to the CME FedWatch tool. Lower interest rates typically enhance the attractiveness of holding non-yielding assets like gold.
The dollar index is holding close to a 5-month low, eyeing its weakest annual performance since 2020. A weaker dollar enhances gold’s appeal for investors holding other currencies.
Market analyst Wang Tao suggests that spot gold may break resistance at $2,073 per ounce, potentially rising to the $2,080-$2,091 range.
In the broader precious metals market, spot silver fell 0.1 per to $24.16 per ounce, set to achieve a marginal 1 per cent gain for the year. Platinum declined 0.2 per cent to $976.75, while palladium saw a 0.3 per cent rise to $1,177.22.
(With Reuters inputs)
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