Gold prices remain above $2,300 as investors bet on Fed rate cuts

After hitting a new all-time record high of $2325.30 gold futures basis the most active June contract has experienced a slight price decline today. As of 5:05 PM EDT the June contract is currently fixed at $2308.50, down $6.50, or -0.28%.

Gold futures pricing was supported today as investors continued to bet on interest rate cuts by the Federal Reserve later this year. The precious metal's safe-haven appeal also received a boost amid growing geopolitical tensions.

Despite the modest pullback, expectations of the Fed lowering interest rates in the coming months remained elevated. In a speech at the Stanford Graduate School of Business, Fed Chair Jerome Powell confirmed the central bank's resolve to bring inflation back down to the 2% target, but emphasized that the overall economic landscape is still positive.

Powell highlighted the economy's robust growth, resilient labor market, and gradually moderating inflation, saying, "We do not expect that it will be appropriate to lower our policy rate until we have greater confidence that inflation is moving sustainably down toward 2%. Given the strength of the economy and progress on inflation so far, we have time to let the incoming data guide our decisions on policy."

While the Fed chair and other officials stressed the need for more data before cutting rates, a move financial markets widely expect in June, investors remained convinced that rate reductions are on the horizon. Futures markets are currently pricing in around a 60% chance of a rate cut at the Fed's June meeting, with expectations for a total of 75 basis points of cuts by the end of the year.

The case for a more accommodative Fed policy stance was further bolstered by recent economic data, including an unexpected surge in U.S. jobless claims and slower services industry growth. Meanwhile, the European Central Bank's (ECB) latest meeting minutes showed officials saw a stronger case for beginning their rate-cutting cycle.

In addition to the rate-cut bets, gold prices found support from safe-haven demand amid heightened geopolitical risks. Strong central bank buying, particularly from emerging market economies, also contributed to the precious metal's appeal.

Looking ahead, all eyes will be on the U.S. jobs report for March, scheduled for release on Friday, April 5. Economists predict the economy added 200,000 jobs last month, with the unemployment rate dropping to 3.8% and hourly earnings rising 0.3%. A softer-than-expected report could further fuel expectations of an imminent Fed pivot.

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