Gold prices edged higher on Friday, poised for a third consecutive quarterly rise, as investors await crucial U.S. inflation data for new insights into the Federal Reserve’s interest rate policies. Spot gold saw a modest increase of 0.3%, reaching $2,334.19 per ounce as of 1145 GMT. U.S. gold futures followed suit, rising by 0.3% to $2,334.50 per ounce.
This quarter’s 4% gain in gold prices underscores the metal’s resilience amid economic uncertainties. Ole Hansen, head of commodity strategy at Saxo Bank, remarked on gold’s robust performance, noting that the current consolidation phase has been minimal. “Gold has so far managed to hold firm, with the current consolidating phase being so shallow that hedge funds that bought into the rally back in February and March have yet to be challenged,” Hansen said.
In May, gold prices soared to an all-time high, driven by a mix of factors, including expectations of rate cuts, China’s stimulus measures, and ongoing geopolitical tensions. Hansen remains optimistic about gold’s trajectory, suggesting that as long as prices stay above $2,200, there is little risk of a significant forced liquidation phase. He anticipates that gold could potentially reach $2,500 by the end of the year, supported by these diverse drivers.
The spotlight now turns to the U.S. personal consumption expenditures (PCE) numbers, the Fed’s preferred measure of inflation, which are due at 1230 GMT. These figures are crucial for maintaining hopes of a Fed easing, which would further bolster gold prices. Matt Simpson, senior analyst at City Index, emphasised the importance of soft PCE data in sustaining these hopes.
Data from the previous session indicated a slowdown in U.S. economic activity, which often prompts investors to turn to safe-haven assets like gold, further supporting gold’s upward movement. However, Fed Governor Michelle Bowman reiterated her cautious stance, stating she is not yet ready to support a rate cut given persistent inflation pressures.
While gold continues to attract attention, other precious metals are also showing notable performances. Spot silver rose by 0.9% to $29.32 per ounce, and platinum saw a significant gain of 2.8%, reaching $1,014.90 per ounce. The broader market trends are setting both metals for quarterly gains.
Spot palladium experienced a substantial rise of 4.3%, hitting $969.00 per ounce. Despite this increase, palladium is on track for a third straight quarterly drop, highlighting the varied performance across the precious metals sector.
As the markets await the U.S. PCE data, gold continues to demonstrate its strength amid economic uncertainties and potential policy shifts. Gold, with a firm hold above $2,200 and the possibility of reaching $2,500 by year-end, remains a critical asset for investors navigating the current economic landscape. The performance of other precious metals like silver, platinum, and palladium also adds depth to the narrative, showcasing the diverse factors at play in the commodities market.