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Gold traded higher on Wednesday, following the previous session’s record highs, as investors awaited Federal Reserve Chair Jerome Powell’s testimony later in the day for clues on the likelihood of a rate cut in June.
The spot price of gold rose by 0.3% to $2,132.80 per ounce on Wednesday, after hitting a record high of $2,141.59 per ounce in the previous session. U.S. gold futures also remained steady at $2,141.60 per ounce. Gold’s price in other major currencies has also reached new record highs, as investors seek to hedge against economic and political uncertainty.
Analyst Carsten Fritsch of Commerzbank has said that the recent weaker U.S. economic data and fears of a stock market correction have led to strong demand for alternative assets, such as bitcoin and gold. Fritsch pointed out that the increasing expectation of interest rate cuts by the Federal Reserve has boosted the appeal of non-yielding bullion.
Along with gold, the world’s largest cryptocurrency, bitcoin, also hit a record high on Tuesday before plummeting. Bitcoin’s gains on Tuesday pushed the 14-day relative strength index (RSI) for gold to 78, well above the 70 mark that indicates an “overbought” asset.
The upcoming congressional testimony by Federal Reserve Chair Jerome Powell will be closely watched by investors, as they look for clues about the Fed’s future monetary policy. Powell is expected to address the state of the U.S. economy and provide insights into the Fed’s plans for interest rates. UBS analysts have suggested that Powell may suggest that rate cuts may be delayed, but are likely to begin in 2024.
Other precious metals also surged as spot silver rose 0.4 per cent to $23.77 per ounce, platinum gained 0.8 per cent to $888.00 per ounce, and palladium gained more than 1 per cent to $958.05 per ounce.
