It was a phenomenal day for gold as the precious metal reclaimed new heights, breaking the longest single-day ascent in more than a month on Thursday. The market players impulse the ingredients that led to the bullish attitude, such as the mixed economic data, including the weak U.S. GDP figures, together with Chair Jerome Powell promising an imminent rate reduction.
The Fed’s hawkish words and the threat of recession pushed the spot gold up by around 0.3% ($2,155.42/troy ounce) at the same time, seven twenty-three in the morning (07:23 GMT). Contrary to this, the US gold futures advanced by 0.2% and almost hit the market closing value of $2,163.10. Through the trading, the yellow metal soared to the record high of $2,161.09 to trigger the bullish winning streak from the previous week, whose data covers the previous month’s duration.
The positive glitter for gold could have been a consequence of Powell’s remarks on Wednesday, which suggested interest could fall as the economy was also likely to evolve “as expected.” This statement was accompanied by disinflationary actions, which, in turn, accentuated the upward trend of gold.
According to Marcus Garvey, the Head of Macquarie’s Commodities Strategy Team, the significantly increased interest could be due to the uncertainty surrounding the future of the U.S. market. Garvement opined that such could be due to a perceived significant short-term buy-in that took place on Friday.
The magnetism of gold is strengthened by the existence of lower interest rates, since they provide a boost to the attractiveness of non-yielding gold bullion. Moreover, Powell’s statement on softer labour market indicators contributed to Treasury yields and the dollar sliding down. Thus, demand for gold grew because of that, which led to its use as a haven asset.
With the latest data yet to be released on the labour and inflation markets, should this figure turn out to be weak, levels of $2,300 can be reached in the short term, according to analysts’ technical assessments. Certainly, the same caveat is applicable; the trend may be short-lived and is expected to correct itself in mature market cycles.
Jigar Pandit, the commodity and currency business director at BNP Paribas’ Sharekhan, suggests that purchasing by central banks might continue because of when major countries remain with their differences. However, a deceleration in China is expected to subdue the global economy, making gold the best option as an investment, irrespective of a financial crisis.
While gold quietly surges, other precious metals experience a rollercoaster ride. Hence, the spot silver fell by 0.4 percent to $24.08, the platinum dropped by 0.3 percent to $904.83 per ounce, and the palladium slid 1.5 percent to $1,026.80, disrupting the amazing surge of over 12 percent from the previous session.
In conclusion, the softness of the gold market can be explained by a mix of factors, including economic and geopolitical uncertainty as well as central bank strategies. Investors are already seeking shelter in gold due to market volatility, leading to an existing potential for gold to remain a stable, safe place to invest, making it interesting for the precious metals market.
