Gold prices surged on Friday, marking their most substantial weekly gain since early April, driven by pessimism surrounding the weak U.S. employment data, which bolstered expectations of interest rate cuts by the Federal Reserve in the coming months.
Spot gold saw an impressive 1.1% increase, reaching $2,372.46 per ounce by 1203 GMT, achieving its highest level in over two weeks. Throughout the week, prices have soared by more than 3%.
In tandem with spot prices, U.S. gold futures also experienced a significant upswing, jumping by 1.7% to $2,379.30.
Also read: Akshaya Tritiya 2024: Gold price rises ₹41,000 in five years. Experts see up to ₹85K peak next year
“Gold is driven higher by rise in festive demand in India with additional support from a weaker U.S. dollar, which is down on rising bets for an early rate cut by the U.S. Federal Reserve. Safe-haven demand due to geo-political issues and mixed momentum in global equities too is seen supportive to the bullion,” said Pranav Mer, VP – Research (Commodity & Currency) BlinkX and JM Financial.
What’s weighing on gold prices?
Gold continued its ascent following a 1% surge on Thursday, triggered by reports revealing a higher-than-anticipated increase in new claims for unemployment benefits among Americans last week.
Investors are eagerly awaiting the release of the U.S. producer price index and consumer price index data scheduled for next week, hoping for new insights into the Federal Reserve’s potential interest rate adjustments.
Traders are currently factoring in approximately a 68% likelihood of a Fed rate cut in September, as indicated by the CME FedWatch Tool. Such rate reductions typically diminish the opportunity cost associated with holding non-yielding assets like gold.
Regarding U.S. inflation, San Francisco Federal Reserve President Mary Daly remarked on Thursday that there is “considerable” uncertainty about its trajectory in the forthcoming months.
In other news, Palestinian residents reported Israeli forces bombarding the city of Rafah in the Gaza Strip on Thursday. Additionally, an Israeli official confirmed the cessation of indirect negotiations with Hamas.
Back home, gold and silver prices made a significant rebound on Friday, after experiencing declines in two consecutive sessions. The yellow metal surged by ₹950, surpassing the ₹73,000-mark in the national capital. This uptick was fueled by a bullish global trend and robust domestic demand, particularly due to the Akshaya Tritiya festival.
Also read: Akshaya Tritiya: Religare Broking lists 6 key reasons to buy gold in 2024
“On Akshaya Tritiya day Gold prices saw sharp uplift Fueled by weak US jobs data and a falling dollar, gold prices on Akshaya Tritiya soared over ₹1,000 in MCX to ₹72,700. This surge follows a ₹2,700 rise within a week as investors reacted positively to the data, anticipating an earlier US interest rate cut that benefits gold. Comex Gold saw rise of more than 28$ at 2375$ strong move of 75$ in one week,” said Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities.
Spot silver increased by 0.8% to $28.56, while platinum strengthened by 1.7% to $990.73, and palladium saw a rise of 1.9% to $985.81. Notably, all three metals experienced gains for the week.
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Published: 10 May 2024, 11:11 PM IST