Gold prices are holding steady as traders weigh the potential impact of upcoming U.S. interest rate cuts and digest new economic data. As of midday Wednesday, spot gold was up 0.4% at $2,417 per ounce, while U.S. gold futures gained 0.5% to $2,418. This rise comes amid growing optimism about a possible Federal Reserve rate cut later this year.
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Fed’s Potential Rate Cuts Boost Gold Demand
The Federal Reserve is expected to cut rates twice this year, according to a Reuters poll, with potential reductions in September and December. “The medium to long-term view for gold still remains supportive because we are instilling two rate cuts this year starting from September,” noted ANZ commodity strategist Soni Kumari to Reuters. Lower interest rates reduce the opportunity cost of holding gold, making it a more attractive investment as the dollar weakens.
Investors Await Economic Data
Investors are keenly awaiting key economic data, including U.S. GDP figures on Thursday and the Personal Consumption Expenditure (PCE) price index on Friday, which could provide further insights into the timing of rate cuts. Additionally, political developments are in focus, as upcoming U.S. elections could influence market dynamics. Ricardo Evangelista from ActivTrades remarked that a more protectionist administration could lead to a stronger dollar, creating headwinds for gold prices, according to Reuters.
India Cuts Gold Import Duties
Meanwhile, India has cut import duties on gold and silver from 15% to 6%, which is expected to boost physical demand in the second half of 2024. Kumari highlighted that “strong physical demand coming from the favorable cut in import duty” will support gold prices, especially as rural incomes rise due to a robust monsoon.
Which Share Is Best to Invest in Gold?
Overall, as expectations for rate cuts and global economic conditions shift, gold remains a key focus for investors navigating the evolving market landscape. In the meantime, gold-focused stocks such as Barrick Gold (GOLD), Newmont Mining (NEM), or Franco-Nevada (FNV) can be a good way of gaining exposure to gold. The TipRanks Comparison Tool indicates the highest potential upside of 25.31% in Barrick Gold over the next 12 months.
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