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Gold prices posted their first weekly decline since mid-February, as investors scaled back expectations of a U.S. interest rate cut after data showed consumer prices rose a little more than expected in February.
The CPI rose 3.2% over the 12 months until February, after rising 3.1% in January; annual consumer price growth has slowed significantly from a peak of 9.1% in June 2022, but progress has stalled in recent months.
But some analysts now believe that gold has already priced in any boost that might come from expectations of falling interest rates, and that policymakers should keep monetary policy tighter for longer if inflation starts to pick up again. go out.
Traders continue to expect rate cuts in June, although the odds have fallen to 59% from 72% ahead of this week’s CPI data, according to the CME’s FedWatch tool.
First-month Comex gold (XAGUSD:CUR) for March delivery is closed -1% for the week at $2,157.30 an ounce, but the yellow metal has still gained 5.4% this month and 4.6% year to date.
Meanwhile, March Comex Silver (XAUUSD:CUR) closed out the week +3.5% at $25.20 an ounce, the highest liquidation value since December 1.
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Despite the uncertainty about gold’s overvaluation in the short term, the general consensus is that the metal’s long-term prospects are relatively rosy.
Goldman Sachs raised its forecast for the average price of gold in 2024 to $2,180 an ounce from $2,090 an ounce previously, also predicting a move to $2,300 an ounce by the end of the year.
Analysts at ING have raised their outlook on gold, now seeing fourth-quarter prices averaging $2,150 an ounce and predicting gold will continue to rise this year as safe-haven demand remains supportive, with ongoing wars and the upcoming US elections causing much uncertainty.
“All things being equal, if we see weakness in the Eurodollar that will help the price of gold,” said John Reade, chief market strategist at the World Gold Council Reade. The Wall Street Journal. “That’s the only thing I would say is keep gold steady right now.”