Gold prices climbed on Tuesday, buoyed by expectations of an early interest rate cut by the Federal Reserve. With traders placing an 89% chance of a March 2024 decrease, the precious metal gained as the dollar and bond yields weakened.
- Softer U.S. inflation data: Friday’s report showing a first-time price drop in over three and a half years fueled dovish sentiment, making gold more attractive.
- Lower rates, lower cost: Reduced interest rates lessen the opportunity cost of holding non-yielding assets like gold.
- Market bets on early cut: The CME FedWatch tool predicts a near-certain rate cut by March, pushing up gold prices.
- Dollar dips, gold shines: A weaker greenback makes dollar-priced gold more appealing to global investors.
- Geopolitical jitters add support: Recent U.S. airstrikes in Iraq amid ongoing tensions added a safe-haven boost to gold’s value.
Looking ahead: Analysts see potential for gold to breach the $2,080 level if the dovish economic trend continues. However, holiday closures in major markets might create subdued trading in the short term.