Gold Holds Gains Near Record Highs as Powell Testimony Awaits

Gold prices held gains above $2,100 an ounce on Wednesday, trading near a record peak hit in the previous session as hopes for a US rate cut by mid-year grew, while traders awaited comments on the health of the economy from Federal Reserve Chair Jerome Powell. Spot prices hit a record high of $2,141.59 an ounce on Tuesday, rising for a fifth straight session.

Traders are weighing risks to the health of the US economy in a rising interest rate environment and looking to Powell’s semi-annual congressional testimony starting later in the day for more clarity on the same. Meanwhile, US services industry growth slowed slightly in February amid a decline in employment and new orders for US manufactured goods fell more than expected in January.

US labor market data due later this week will also be closely watched. Any downside surprise could help support gold. Traders currently see a 71% chance of a rate cut by the Federal Reserve in June. Lower interest rates tend to boost the appeal of non-yielding gold.

Gold and the dollar now

Gold futures are now down about 0.18% to $2,137 an ounce. Spot gold is up 0.09% to $2,130 an ounce. The dollar index is down about 0.1% to 103.647.

Other metals

Platinum rose 0.4% in spot trading to $884.16 an ounce, palladium rose more than 1% to $958.20, while silver fell 0.3% to $23.63.

Bitcoin pares losses, hovers around $65,000 after record high

Bitcoin pared most of its losses in Asian trading on Wednesday, staying within sight of a record high hit earlier as steady capital inflows into US-listed exchange-traded funds and the anticipation of a “halving” event kept buyers in the fray.

The world’s largest cryptocurrency was last up 0.28% at $67,032. The token had fallen almost immediately after hitting the peak, dropping to as low as $59,000 before paring losses. The gains in bitcoin come amid steady capital inflows into the recently launched spot-based exchange-traded funds in US markets. Data earlier this week showed that US crypto funds saw inflows for a fifth straight week, with bitcoin products accounting for the lion’s share of the inflows.

The approval of a spot ETF by the European Securities and Markets Authority appears to have drawn a wave of institutional investors into cryptocurrencies. Bitcoin has also been supported by the anticipation of the “halving” event in April, which will see the rate of new bitcoin production cut in half, limiting new supply.

Oil rises as OPEC+ cuts outweigh demand concerns in China and the United States

Oil prices rose slightly on Wednesday as supply tightness from output cuts by major producers outweighed concerns about demand growth in China and the United States, the world’s biggest crude consumers.

Brent crude futures rose 17 cents to $82.21 a barrel, after falling in the previous four sessions. US West Texas Intermediate (WTI) crude futures rose 19 cents to $78.34 a barrel, after falling in the previous two days. China’s 2024 economic growth target of around 5% lacks major stimulus plans to support its struggling economy, raising concerns that demand growth in China could lag this year. Beijing announced the target on Tuesday.

Oil prices were supported by the announcement on Sunday by the OPEC+ alliance, which includes the Organization of the Petroleum Exporting Countries (OPEC) and its allies, to extend production cuts of 2.2 million barrels per day until the end of the second quarter.

The extension has led to some tightness in supply, especially in Asian markets, coupled with disruptions to tanker movements due to attacks in the Red Sea by Yemen’s Houthi group. Official data from the US Energy Information Administration is due on Wednesday at 15:30 GMT. If the EIA reports an increase in crude oil stocks, it will be the sixth straight week that US oil inventories have risen.

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Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances, or needs.

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