Gold at three-week high on hopes of US rate cut

Gold prices surged to over three-week highs to $2,085.40 per ounce, driven by a weakened US dollar and declining bond yields, fuelling expectations of imminent US interest rate cuts.

The precious metal, poised for a 14 per cent gain, marked its highest level since December 4. US gold futures also rose to $2,096.40, reflecting increased investor confidence. The likelihood of a Federal Reserve rate cut in March stands at 88 per cent, according to the CME FedWatch tool, following subdued inflation data.

The dollar index hit a five-month low, concluding its worst year since 2020, while the 10-year bond yield hovered near July lows, enhancing gold's appeal. Analysts, including Kyle Rodda of Capital.com, stressed that gold's trajectory in 2024 hinges on the accuracy of market expectations regarding rate cuts and the potential emergence of recessionary conditions in the US.

Investors are now awaiting US initial jobless claims data for further insights into monetary policy. Spot silver also saw an 0.8 per cent increase to $24.44 per ounce, ending the year with a 1.4 per cent gain, while platinum rose 0.6 per cent to a more than six-month high of $1,002.39.

In contrast, palladium experienced a 0.3 per cent decline to $1,150.27, heading for its most significant yearly drop since 2008.

(With Reuters inputs)