Gold gains on Fed rate cut hopes

Bullion rose as much as 0.7% after finishing lower on Tuesday. Data showed consumer spending unexpectedly stalled in December, ahead of a closely watched January jobs report due Wednesday, News.Az reports, citing Bloomberg.

Meanwhile, US 10-year Treasury yields fell to their lowest level in nearly a month, and the dollar weakened against all Group-of-10 currencies.

The precious metal had surged to a record above $5,595 an ounce in late January amid geopolitical tensions, concerns over the Fed’s independence, and a broader shift away from traditional assets such as currencies and sovereign bonds. However, heavy speculative buying overheated the rally, triggering a sharp 13% drop over two sessions.

Gold has since recovered roughly half of those losses and has traded around $5,000 an ounce this week. Several banks remain optimistic about further gains, citing enduring supportive factors. BNP Paribas forecasts prices reaching $6,000 by year-end, while Deutsche Bank and Goldman Sachs also maintain bullish outlooks.

Further reductions in US borrowing costs would likely provide additional support for gold. President Donald Trump’s nominee for Federal Reserve chair, Kevin Warsh, has advocated for more rate cuts. However, Cleveland Fed President Beth Hammack said Tuesday that rates could remain on hold for an extended period as policymakers assess incoming economic data.

Spot gold rose 0.4% to $5,044.53 an ounce as of 1:18 p.m. in Singapore. Silver gained 2% to $82.4272 an ounce, while platinum and palladium both advanced more than 1.5%. The Bloomberg Dollar Spot Index slipped further after declining more than 1% over the previous three sessions.