Gold prices showed little movement in Asian trade on Friday, remaining within a recent trading range as the conviction grew that the Federal Reserve would not cut interest rates early in 2024. While gold was set for some gains during the week, it was largely a recovery from significant losses observed in the previous two weeks. Ongoing concerns about higher-for-longer interest rates continued to constrain any major upside in gold prices, along with the relative strength of the dollar and Treasury yields.
As of 00:15 ET (05:15 GMT), spot gold rose 0.1% to $2,025.80 an ounce, while gold futures expiring in April increased 0.2% to $2,035.15 an ounce. Both instruments were on track to add around 0.7% for the week, recovering from a 4% decline in the previous two weeks. Gold prices remained firmly within the $2,000 to $2,050 per ounce trading range observed for most of 2024.
The outlook for gold remained subdued as various signals in the market led to a further pricing out of early rate cuts by the Federal Reserve. Comments from Fed Governor Christopher Waller and other Fed officials, along with strong labor market data, contributed to the market reducing the probability of an early rate cut. The CME Fedwatch tool indicated that markets nearly eliminated the chance of a May rate cut, with the likelihood of a hold in June increasing to 38.6%. Traders also lowered the probability of a June cut, and Goldman Sachs analysts no longer expected a cut in May.
The potential for higher interest rates for a more extended period exerts additional pressure on gold prices, as higher rates increase the opportunity cost of buying bullion. Nevertheless, gold outperformed other precious metals during the week, with platinum futures steadying and silver futures falling. Platinum futures were down 0.8%, while silver futures were down 3.2% for the week.