Gold Near Record Highs as Investors Await US Data

Gold prices rose on Tuesday, hovering near the record peak hit in the previous session, supported by firm central bank buying, while investors awaited the US Federal Reserve’s policy meeting minutes and inflation data for fresh cues.

Spot gold was up 0.3% at $2345.09 per ounce by 0621 GMT, after hitting an all-time high of $2353.79 on Monday. US gold futures gained 0.5% to $2363.50. The minutes of the Federal Open Market Committee’s (FOMC) March meeting and US consumer price index data are due on Wednesday. The Fed kept rates unchanged at 5.25-5.50% in March.

After a strong US jobs report on Friday, the market has pared back expectations for the number of rate cuts this year to two from three or four just a few weeks ago, according to the CME FedWatch tool. Rising interest rates tend to reduce the appeal of non-yielding bullion.

Among other precious metals, silver rose 0.2% in spot trading to $27.90 per ounce after hitting its highest since June 2021 earlier in the session. Platinum climbed 1.8% to $975.60, while palladium rose 1.3% to $1055.14.

Continued Hawkish Fed Talk

The Federal Reserve remains a key force this week, following Friday’s upbeat jobs report and ahead of the latest US consumer price data on Wednesday.

Recent evidence of US economic strength, despite the Fed’s prolonged rate hike cycle, has led traders to大幅 reduce bets on the extent of Fed rate cuts this year. December Fed funds futures on Monday implied expectations for about 60 basis points of rate cuts this year, compared with about 150 basis points priced in at the start of 2024. This is even as the Fed projects it will cut rates by 75 basis points this year.

Fed speakers have sounded the alarm on cutting rates too soon, with Minneapolis Fed President Neel Kashkari last week even suggesting there could be no cuts this year. However, the tone has appeared to turn more dovish this week, with St. Louis Fed President James Bullard saying he expects three rate cuts this year as inflation moves towards the central bank’s target.

Chicago Fed President Charles Evans also said the US central bank should consider how long it can maintain its current stance on rates without hurting the economy.

Bitcoin Breaches $72,000. What’s next?

Bitcoin’s price surge is being attributed to a combination of factors including increased investor enthusiasm. Inflows into cryptocurrency exchange-traded funds (ETFs) have accelerated as the second quarter kicked off with a strong start, snapping a two-week streak of outflows.

The first spot Bitcoin ETF was approved by the US Securities and Exchange Commission in January. It trades on US exchanges and allows institutional and retail investors to gain exposure to Bitcoin without directly owning the underlying asset. Another factor driving Bitcoin higher is the so-called “Bitcoin halving,” scheduled for April 20, which aims to reduce the supply of Bitcoin to control its inflation. This has historically led to Bitcoin price rallies, with the last one occurring in 2020.

Bitcoin was trading 4.2% higher at $72,195, crossing the $71,000 level for the first time since mid-March. The digital currency has surged by more than 140% in the past 12 months and hit a record high above $73,000 on March 13.

Crude Oil Recovers Some of Its Lost Gains

Oil prices rose on Tuesday, recovering some of what they lost in the previous session due to uncertainty surrounding a possible ceasefire in the conflict between Israel and Hamas.

As of 04:35 ET, US crude futures were up 0.5% at $86.87 a barrel, while Brent crude was up 0.5% at $90.85 a barrel. A new round of ceasefire talks between Israel and Hamas in Cairo ended a multi-session rally on Monday, but the chances of an immediate ceasefire remain slim as the two sides have failed to reach an agreement despite repeated efforts to mediate peace.

Oil prices remained near five-month highs, supported by the idea that any production cuts from the oil-rich region are likely to further tighten global oil markets.

However, gains were capped on Tuesday ahead of key inflation data from both the United States and China later in the week, as well as industry data on US crude inventories later in the session.

For further insights, check OneRoyal’s Facebook, Instagram, and Twitter pages and expand your understanding of financial markets with global perspectives.  Staying informed is crucial in the ever-evolving world of finance.

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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