Treasury yields climbed to fresh 2024 highs and the dollar rose after Powell’s comments, while bullion held modest gains.
For gold traders, Powell’s remarks didn’t break much new ground, although his comments suggested a May rate cut is off the table and June is increasingly unlikely. Swap markets show the Fed will only begin easing in September, after indicating July a week ago. Lower rates are generally positive for gold as it pays no interest.
Earlier Tuesday, Fed Vice Chair Philip Jefferson said that while there has been considerable progress in slowing consumer price gains, the Fed’s task of sustainably restoring 2% inflation is “not yet done.” His San Francisco counterpart Mary Daly reiterated late Monday that there’s no urgency to adjust interest rates, pointing to solid economic growth, a strong labor market and still-elevated inflation.
The precious metal remains in a weeks-long uptrend as investors seek safety amid growing geopolitical tensions, which helped bullion chalk a 1.7% gain on Monday.
Long-standing supports — including robust buying by central banks and increased demand from Chinese consumers — are also underpinning prices.
The Reserve Bank of India continued its gold purchases in March, according to a post on X from Krishan Gopaul, investment research analyst at the World Gold Council. Year-to-date purchases of nearly 19 tonnes now exceed its 2023 net purchases of 16 tonnes, he added.
Citigroup Inc. raised its 2024 gold estimate to $2,350 an ounce and made a “massive 40% upward revision” to its 2025 forecast to $2,875, it said in a note. That came after Goldman Sachs Group Inc. said Friday the metal was in an “unshakable bull market,” raising its year-end prediction to $2,700.
Spot gold was up 0.5% at $2,394.81 an ounce as of 3:26 pm in New York. The Bloomberg Dollar Spot Index added 0.3%. Silver, platinum and palladium all declined.
