Gold prices climbed significantly on Tuesday, exceeding the crucial $2,000 per ounce mark, as the US dollar and yields declined. Weaker US economic data reinforced expectations of a slower pace of rate hikes, despite rising concerns over oil-driven inflation. Spot gold rose by 1.7% to $2,017.92 per ounce at 2:00 p.m. EDT (1800 GMT), reaching its highest level since March 9 of the previous year at $2,024.89 earlier in the day. US gold futures settled with a 1.9% increase at $2,038.20.
Silver, platinum, and palladium also experienced gains, with silver surging 3.8% to $24.91 per ounce, platinum rising 3.3% to $1,017.91, and palladium increasing 0.3% to $1,456.05. David Meger, director of metals trading at High Ridge Futures, noted that the combination of slowing economic data and persistent inflationary pressures created a favorable environment for gold.
The US dollar experienced further losses following the release of data showing a drop in US job openings in February to a nearly two-year low, while factory orders also decreased. Gold, traditionally viewed as the preferred inflation hedge, has managed to withstand the usual pressure from potential interest rate hikes, which could be implemented to counter rising price pressures, due to a surge in oil prices this week following an unexpected output cut by OPEC+.
Alexander Zumpfe, a precious metals dealer at Heraeus, suggested that gold prices are likely to remain strong and stabilize at their current level or even higher. He identified the $2,050 mark as a crucial resistance level, adding that if breached, prices could rapidly approach an all-time high.
Market participants currently estimate a 43% chance of the Federal Reserve raising rates by a quarter basis point in May, while a pause has a roughly 57% chance. However, Exinity's Chief Market Analyst Han Tan cautioned that further rate hikes could lead gold to reverse some of its recent gains.
