Gold rally could extend beyond recent highs
Gold has increased by nearly 19% since a low in October and about 7% in the past month. UBS strategists suggest there might be a short-term pullback in gold prices, but the rally could continue over the year. Factors supporting gold include potential Federal Reserve rate cuts, central banks and investors buying gold, and increased geopolitical risks. Gold prices have surpassed ,180, reaching near ,200 highs in Asian trading. The Federal Reserve’s potential rate cuts this year and ongoing geopolitical tensions are supporting gold’s value. Fed Chair Jerome Powell indicated the U.S. economy is healthy, and rate cuts could begin once there is confidence in inflation’s downward trajectory. Futures markets anticipate a 70% chance of the Fed cutting rates by mid-June, with a total of one percentage point reduction by year-end. U.S. Nonfarm Payrolls (NFP) data for February showed 275,000 jobs added, exceeding expectations and potentially influencing Fed rate decisions. China’s inflation data for February indicates a return to normal consumption levels, positively affecting gold prices as China is a major consumer of gold. The Chinese Consumer Price Index (CPI) increased by 0.7% year-over-year in February, and the Producer Price Index (PPI) declined by 2.7% year-over-year in the same month. Upcoming U.S. CPI and Retail Sales data for February are awaited for further market direction, with CPI expected to increase by 0.4% month-over-month and Retail Sales projected to rise by 0.7% month-over-month.
