Gold Rises After 27% Speculation Rise as Traders Eye U.S. Rate Path
Gold rose after posting its biggest annual gain since 2010, with the metal seen as a safe-haven asset benefiting as risk-off sentiment grips broader markets.
Bullion rose as much as 0.8%, rising alongside other precious metals as Asian and European equity markets slumped on the first trading day of the year. Last year’s 27% rally was fueled by the Federal Reserve’s rate-cutting cycle, continued safe-haven demand and a wave of central bank buying, with many analysts seeing further gains this year.
“Despite the Fed’s cautious tone, continued central bank buying and geopolitical uncertainty are expected to keep gold in focus as a preferred safe-haven asset,” Kaynat Chainwala, an analyst at Kotak Securities, said in a note. Investors are now focused on the path of U.S. interest rates, after Chairman Jerome Powell last month signaled greater caution over how quickly the central bank can continue to ease borrowing costs amid renewed concerns about inflation. Lower interest rates are usually positive for bullion, which doesn’t pay interest.
Key economic data due later in the week, including U.S. jobless claims and a manufacturing report, will be closely watched for clues on the Fed’s easing trajectory.
Spot gold rose 0.6% to $2,640.57 an ounce as of 11:35 a.m. in London. The Bloomberg Dollar Spot Index edged up, erasing earlier losses. Silver, palladium and platinum all rose.
Source: Bloomberg
