Gold prices are on track for their third consecutive week of gains, buoyed by strong safe-haven demand and expectations of lower U.S. interest rates, ahead of the release of crucial U.S. non-farm payrolls data.
As of 1214 GMT, spot gold was up 0.1% at $2,291.20 per ounce, after reaching a record high of $2,305.04 on Thursday. Meanwhile, U.S. gold futures edged 0.1% higher to $2,310.40, marking a 2.6% increase for the week so far.
The recent upward trajectory in gold prices has been attributed to geopolitical tensions and anticipation of Federal Reserve rate cuts in the first half of the year, according to Ricardo Evangelista, a senior analyst at ActivTrades.
Investor focus is now squarely on the U.S. March non-farm payrolls (NFP) data scheduled for release at 1230 GMT. The outcome of this data could either confirm the recent hawkish stance of the Federal Reserve, advocating for sustained higher rates, or alter market expectations by reigniting speculation of an initial rate cut in June.
Federal Reserve Chair Jerome Powell has emphasized that the central bank has sufficient time to deliberate over its first rate cut, citing the strength of the U.S. economy and recent high inflation readings.
Currently, traders are pricing in a roughly 65% chance of a rate cut by the Fed in June, according to the CME FedWatch tool. Lower interest rates tend to diminish the opportunity cost of holding gold, making the precious metal more attractive to investors.
Despite the positive momentum in gold prices, Hugo Pascal, a precious metals trader at InProved, cautioned that gold is trading in overbought territory. He suggested a high probability of a correction in the coming days, with a target price of $2,250 for gold.
In other precious metals, spot silver fell 1% to $26.66 per ounce after hitting its highest level since June 2021 on Thursday. Platinum also eased by 0.2% to $924.10 per ounce, while palladium dipped 1.3% to $1,008.01 per ounce.
The overall sentiment in the precious metals market remains cautiously optimistic, with investors closely monitoring economic indicators and geopolitical developments for further cues on the future direction of gold prices.