Gold Shines on the First Trading Day of the New Year

Soukaina Sghir
Soukaina Sghir
2 Min Read

Gold prices rose during Tuesday’s trading, supported by the possibility of the Federal Reserve cutting interest rates in 2024, while investors await a series of economic data this week for further clarity on the expectations of the U.S. interest rate trajectory.

Kelvin Wong, Chief Market Analyst for Asia-Pacific at OANDA, stated, “The short-term upward trend for gold remains above the key support level of $2017 per ounce.”

The prices of the yellow metal rose by 13% in 2023, marking its first annual gain since 2020, as hopes that the U.S. central bank might cut interest rates early in March led to increased demand for safe-haven assets.

Investor focus is now on the release of the minutes from the recent Federal Reserve meeting scheduled for this Thursday to obtain more signals about interest rate cuts this year.

In this regard, Wong from OANDA said, “There was a change in the tone at the Federal Open Market Committee meeting in December, so traders will be looking for more clarity on this cautious stance, especially regarding what Federal Reserve officials are looking at.”

Markets now expect an 86% chance of the Federal Reserve lowering interest rates in March, according to CME FedWatch tool.

A decrease in interest rates reduces the opportunity cost of holding gold, which does not yield returns.

The data on the U.S. employment report for December will also be closely monitored for further insight into the interest rate path, set to be released on Friday.

On a technical level, gold may retest support levels around $2062 per ounce, and a decline below this level may open the way to $2053, according to Reuters.

Price Changes

Gold in spot trading rose 0.6% to $2074.01 per ounce by 0757 GMT. U.S. gold futures increased by 0.6% to $2083.00 per ounce.

As for other precious metals, silver rose 1% to $24.04 per ounce, palladium increased 0.2% to $1100.90 per ounce, and platinum declined 0.2% to $985.79 per ounce.

Soukaina Sghir

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