Gold Jumps to Weekly High on Speculations of Federal Reserve Rate Cut

Gold scaled a fresh weekly peak on Thursday, supported by bets for Fed rate cuts this year amid slowing economic growth, though a rebounding USD and yields capped gains.

Gold increased to a weekly high on Thursday as investors raised their expectations of two Fed rate cuts next year due to softer global growth.

Spot gold traded above the 50-day simple moving average resistance level that is at $2,345 as bulls look ahead to the next possible breakout. The incoming U. S. economic data led the higher charge, which showed that inflation is continuing to cool, with retail sales, both consumer and producer prices being weaker than expected. 

Market pricing also indicates a higher probability of a September hike in the Fed Funds rate, with another rate cut by the year end. This expectation coupled with geopolitical stand-off in Europe and Middle East has led to increase demand for gold as safe haven asset.

Experts pointed out that even though the Fed upped the ante last week with only one rate cut seen in 2024 instead of three anticipated in March, the signs are indicating that the cycle of monetary policy tightening is almost over. The recovery in yields on the benchmark U. S. Treasury put a temporary limit on any further gains in gold. 

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Further, other economic indicators such as jobless claims and housing data due later this week can potentially shift the Fed rate path and gold’s trend. Traders also pay attention to the policy decisions made by the Swiss National Bank and the Bank of England.