Gold prices reaches one-week high; dollar weakens, investors seek future rate cuts

As the dollar declined on Tuesday, gold prices surged to their highest level in almost a week. Meanwhile, investors’ attention was drawn to the publication of the minutes from the U.S. Federal Reserve’s most recent monetary policy meeting, which may provide clues about future interest rate cuts.

As of 11:27 a.m. ET (16:27 GMT), spot gold was up 0.5% at $2,027.79 per ounce. American gold futures increased by 0.8% to $2,039.40 an ounce.

For buyers abroad, the price of bullion purchased in US dollars was less expensive because the dollar index went down 0.3%.

On Wednesday, the minutes of the January policy meeting of the US central bank are due.

“We continue to see the likelihood that the Fed will lower rates by mid 2024,” which is going to be an underlying supportive factor for the gold market,” stated David Meger, director, metals trading at High Ridge Futures.

Meger stated that there is structural support below the $2,000 mark and that the Fed minutes will confirm that rate cuts would be postponed until May or June. This will undoubtedly not benefit the gold market.

“Strong physical market buying activity has kept (gold) prices from weakening,” analysts at TD Securities penned down.

“At a certain price, silver will always make its way to market, but the outlook for physical demand suggests that higher prices will be necessary to satisfy the ongoing period of structural deficits.”

At $23.03 an ounce, spot silver was up 0.1%. Palladium increased 0.4% to $959.97 per ounce, while spot platinum climbed 0.9% to $906.12 per ounce.