©Reuters. FILE PHOTO: Bars of 99.99 percent pure gold are processed at the Novosibirsk Precious Metals Refining and Production Plant in the Siberian city of Novosibirsk, Russia, September 15, 2023. REUTERS/Alexander Manzyuk/File Photo
By Brijesh Patel and Sherin Elizabeth Varghese
(Reuters) – Gold prices extended gains to a record high on Thursday after comments from Federal Reserve Chair Jerome Powell fueled expectations of lower U.S. interest rates this year.
Gold tends to rise when interest rates are low, which reduces the opportunity cost of holding unprofitable bullion.
gained 0.4% to $2,157.51 an ounce, at 1003 GMT. The U.S. rose 0.3% to $2,165.20.
The bullion hit a record high of $2,161.09 early in the session and was on track for its longest intraday winning streak since at least November 2021.
Powell said Wednesday that rate cuts will “likely be appropriate” later this year “if the economy evolves substantially as expected” and once officials gain more confidence in the continued deceleration of inflation. Powell will speak again Thursday.
“The primary driver of this recent gold rally is a continued decline in real yields, with inflation expectations continuing to cool, driving buyers into gold from money market accounts and Treasury bonds,” he said Arthur Parish, SP Angel analyst.
Powell’s remarks, along with data released the same day indicating weaker labor market conditions, pushed down U.S. Treasury yields and the dollar, boosting demand for gold. [USD/] [US/]
In the near future, attention will be focused on the European Central Bank’s rate decision, due at 13.15 GMT, when the central bank is expected to keep interest rates unchanged at record highs.
Friday’s U.S. Nonfarm Employment Report, released on Friday, is expected to provide more clarity on U.S. rate cuts. Employers are expected to have added 200,000 jobs during the month, according to the poll of economists conducted by Reuters.
“A lower-than-expected figure will likely push gold closer to $2,200 an ounce in the spot market,” Parish said.
Spot silver held steady at $24.16, platinum rose 0.9% to $915.60 an ounce, while palladium slipped 1.3% to $1,028.52, after a strong rise in the last session.