Gold hits record high amid economic concerns

In the week end, Kotak Securities analysed that the Comex Gold eased after rallying to near record high levels buoyed by rising hopes of a Fed pivot in June, fund buying and lingering geopolitical tensions in the Middle East.

Comex Gold prices closed (4 to 8 March week) at a record high of $2141.9 per troy ounce on March 5, not far from the record high of $2152.3 per troy ounce touched in December, as weak economic data from US raised some alarms about an economic slowdown in the US and strengthening the case for the Fed to cut rates this year.

Data released on March 7, showed the ISM Services PMI fell to 52.6 in February 2024 from a four-month high of 53.4 in January and below forecasts of 53, while the new orders for US manufactured goods fell by 3.6% m/m in January, following a revised 0.3% decrease in December, and compared with market forecasts of a 2.9% decline.

It is the biggest decrease since April 2020. US 10-year treasury plunged to a three week low, boosting the appeal for the non-yielding gold. For the day, markets will be watchful of US JOLTs job opening, ADP employment change and Powell’s testimony.

During the semiannual monetary policy testimony to a House committee on March 6, and a Senate panel on March 5, Fed chair Jerome Powell is expected to maintain a hawkish stance, signaling to markets that the Fed is in no hurry to cut rates, especially after fresh inflation data showed that price pressures persist. Caution ahead of Powell’s speech might take some steam off the yellow metal.

At the Silver front, the 4 to 8 March week, the Comex said, Silver prices closed lower on Tuesday, tracking weakness in base metals as China’s 5% bullish growth target was seen as target without plans and failed to entice investors. Industrial commodities have struggled this year amid a disappointing recovery in the world’s second-largest economy amid a slump in property sector, weak consumer confidence and deflation, and investors are closely watching the annual National People’s Congress for demand insights. Weak in dollar and yields might provide cushion.

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