Gold kicks off 2024 on higher note on US Fed rate-cut hopes

GOLD prices edged higher on Tuesday (Jan 2), supported by the prospect of interest rate cuts in 2024 from the Federal Reserve, while investors look forward to a slew of economic data this week for more clarity on the US rate outlook.

Spot gold was up 0.3 per cent at US$2,068.29 per ounce, as at 0129 GMT. Bullion prices gained 13 per cent in 2023 to post their first annual gain since 2020.

US gold futures also climbed 0.3 per cent to US$2,077.40 per ounce.

Focus this week will be on minutes from the last Fed meeting due on Thursday for more cues on rate cuts this year. Data on US job openings and December non-farm payrolls will also been keenly watched this week.

At its December policy meeting, the Fed adopted an unexpectedly dovish tone and forecast 75 basis points in rate reductions for 2024.

Markets are now pricing in an 86 per cent chance of rate cuts from the US central bank in March, according to CME FedWatch tool.

Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the US dollar, making gold cheaper for investors holding other currencies.

The US dollar index was steady on the first trading day of the year after posting its first yearly loss since 2020.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.16 per cent to 879.11 tonnes on Friday from 880.55 tonnes on Thursday.

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Gold’s rise expected to gain further momentum

Physical gold demand in India remained sluggish last week as the rally in local prices to near record highs discouraged buyers during the year-end holidays.

Spot silver gained 0.5 per cent to US$23.88 per ounce, while platinum was steady at US$987.61. Palladium slipped 0.9 per cent to US$1,088.82. REUTERS