Gold Trades High On Rate Cut Hopes

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Gold Trades High On Rate Cut Hopes

Gold Trades Above $2170 On Early Rate Cut Hopes

Gold prices have managed to touch another high as Friday's session came to a close. The rise in yellow metal came after a report showed a jump in the US unemployment rate.

The conditions of the labor market and the unemployment rate in the USA have opened doors to talks of early rate cuts once again. Many experts now believe that the June meeting could lead to a rate cut from the Federal Reserve.

Spot Gold Up By 0.5%

After the unemployment report, Spot gold gained 0.5% and was last seen at nearly $2170.55, while the futures contract showed a 0.9% upside with a trading price of $2185.

Over all, the yellow metal has managed to close one of its best weeks since the October 2023. The recent upside in Gold also highlights that the market's dynamic has changed as investors are now favoring non-yielding asstes.

According to one expert, the gold market is running in the hopes of early rate cuts along with broader weakness in the US dollar. As long as these factors stay in place, Gold will continue its upward trend.

If we look at the DXY, it is down by 0.1%, which means Gold has become cheaper for foreign buyers. At the same time, the yield on the US bonds has dropped to a monthly low.

After the release of the unemployment numbers, there's now a 30% chance of rate cuts in May 2024. For the month of June, the chances of rate cuts stand at 73% in case the Fed makes no move in May.

Overall, a low-interest rate environment represents a favorable situation for the Gold market. As the market players are looking forward to rate cuts in the USA, it makes sense for the Gold to turn higher.

It seems even Spot Silver is enjoying the recent economic news as it also gained 0.3%. The Silver's trading price is nearly $24.25 with an upside bias, which suggests that it follows the Gold's lead.

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