On Thursday, 11 April, gold prices surged as softer-than-expected US producer prices data fueled optimism for potential interest rate cuts this year, while ongoing geopolitical uncertainties continued to bolster the appeal of the yellow metal.
Spot gold witnessed a 0.3 per cent increase, reaching USD 2,340.69 per ounce, while US gold futures climbed 0.4 per cent to USD 2,358.40 per ounce. Conversely, spot silver experienced a slight dip, edging 0.3 per cent lower to USD 27.89 per ounce. Platinum, on the other hand, rose by 1.4 per cent to USD 972.85, while palladium witnessed a decline of 1.8 per cent to USD 1,032.50, as reported by Reuters.
The rally in gold prices followed the release of the US Labor Department’s report on the producer price index (PPI), which indicated a 0.2 per cent month-on-month (MoM) increase in March. The figure, lower than the 0.3 per cent rise anticipated by economists, assuage concerns about elevated interest rates.
The previous day’s data revealing a 0.4 per cent MoM increase and a 3.5 per cent year-on-year (YoY) rise in the US consumer price index (CPI) had heightened fears of a delayed interest rate cut by the US Federal Reserve. However, core prices, which remained unchanged at a 3.8 per cent YoY increase, continue to be closely monitored by the central bank as an indicator of inflation trends.
In response to the inflation data, traders are now speculating that the Fed may initiate interest-rate cuts as early as its late-July meeting, reinstating hopes for gold’s performance as an inflation hedge. However, the allure of holding non-yielding gold diminishes in the face of higher interest rates.
As per market analysts, looking ahead, gold and silver prices are expected to face resistance levels internationally at USD 2450-USD 2485 and USD 28.50-USD 28.95 respectively, with domestic levels projected around 72000-72200 for gold and 83500 for silver. Analysts anticipate profit-taking in both precious metals given the current market conditions, pending further signals from the Fed regarding rate cuts.
