Gold extends rally on rate cut expectations
Fed member hints at rate cuts; gold climbs to $2,036. Market now watches US data for signs of growth and policy shifts.
Gold (XAU/USD) soared on Tuesday, hitting $2,036 per ounce in late afternoon London time. This rise came as Federal Reserve officials hinted at potential interest rate cuts in 2024 due to easing inflation.
Fed Governor Christopher Waller, usually seen as strict on policy, acknowledged the possibility of lowering rates if inflation keeps dropping. Traders are already pricing in a 75% chance of a rate cut by May, causing the US dollar to drop and interest in bonds, stocks, and gold to rise.
A triple-top pattern has kept gold capped below $2,080 since 2020. But now bullion looks ready to take a fourth crack at breaching that threshold if dollar weakness continues.
The next move for gold depends on upcoming US data, especially Friday's PCE inflation report. It will give clues about US growth and policy, affecting how the market views the Fed's options on interest rates. If inflation stays low, it could help gold. Also, economic uncertainties might lead to more money flowing into safe-haven assets like gold.
