Gold prices remained steady near $4,160 per ounce on Thursday, following a 1% rise in the previous session, driven by growing expectations of interest rate cuts in the United States. This stability comes amid a series of remarks from Federal Reserve policymakers, signaling a further easing of monetary policy in the world’s largest economy.
Market sentiment is currently shaped by an 80% probability of a quarter-point interest rate cut in December, as indicated by swap traders. Despite recent U.S. jobless claims data, which failed to deter expectations, the Federal Reserve seems poised to implement further rate cuts to stimulate economic growth.
Gold Set for Best Performance Since 1979
Gold has surged approximately 60% so far this year, putting it on track for its best annual performance since 1979. The metal’s strong rally has been supported by increased central bank purchases, higher inflows into gold exchange-traded funds (ETFs), and a shift by investors away from government bonds and currencies.
Although gold recently retreated from record highs reached late last month, it has maintained its position above the $4,000-per-ounce level. Analysts suggest that the market is waiting for a new catalyst to drive prices higher, as recent inflows into gold ETFs have remained relatively flat compared to the sharp increases seen in September and October.
Fed Policy and Economic Developments
The potential appointment of Kevin Hassett, a key economic advisor to former U.S. President Donald Trump, as the next Federal Reserve Chair could further reinforce a dovish monetary stance. Hassett is expected to align with policies favoring lower interest rates, which traditionally benefit gold as it does not yield interest.
Broader Market Trends
Global equities have also rallied for four consecutive days, buoyed by the same expectations of U.S. interest rate cuts. Meanwhile, other precious metals have mirrored gold’s stability. Silver, for instance, remained steady after a 3.7% rise on Wednesday, approaching record levels. Palladium prices rose, while platinum saw little movement.
Analysts’ Outlook
According to Standard Chartered analysts, the current slowdown in ETF inflows signals a potential vulnerability in gold prices in the near term. However, they note that the metal’s resilience above $4,000 offers a strong support level amid ongoing market uncertainty.
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