On Monday, gold prices experienced a decline as optimism surrounding early U.S. interest rate cuts dwindled. The market’s attention has now turned towards the upcoming Federal Reserve policy meeting and the release of U.S. non-farm payrolls data later this week, seeking further insight into the trajectory of monetary policy.
Spot gold saw a 0.31 percent decrease to $2,330.6 per ounce, as of 6:35 GMT. Meanwhile, U.S. gold futures saw a 0.19 percent decrease to $2,342.70.
Monetary policy’s impact
Analysts noted that gold prices faced immediate challenges due to the expectations of delay in interest rate cuts. However, if gold manages to maintain its current range between $2,200 and $2,350, it could capitalize on potential downturns in U.S. macroeconomic data in the coming quarters.
The upcoming April 30 to May 1 Federal Reserve policy meeting and the release of U.S. non-farm payrolls data on Friday are pivotal events for the market this week. Markets expect the Federal Reserve to maintain its benchmark interest rate steady at 5.25 percent to 5.5 percent during this meeting.
Analysts warned that if Federal Reserve Chair Jerome Powell delivers a hawkish tone during the meeting, coupled with another robust jobs report, gold prices may face challenges testing key support levels.
Currently, investors are pricing in a single rate cut for this year, anticipated to occur in November. This projection comes in the wake of persistent U.S. inflation data and hawkish comments from Fed officials, including Chair Jerome Powell, which have tempered expectations of rate cuts soon. Higher interest rates reduce the appeal of holding non-yielding assets like gold.
China to support gold prices in 2024
Citi research remains optimistic, citing a structural strengthening of consumption trends and potential support from the People’s Bank of China (PBoC), which could boost gold prices. The research predicts a base case scenario of $3,000 per ounce of gold over the next 12-15 months, with the possibility of further enhancement through increased local buying amid fears of yuan devaluation.
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Other precious metals
Despite a decline in gold prices, Spot silver rose 0.39 percent to $27.27 per ounce, spot platinum was up 0.42 percent to $919.40 and palladium gained 0.03 percent to $954.45.
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