Gold prices showed a mixed trend on Wednesday, while bond prices rose as markets expect a decline in interest rates across the globe.
Gold spot edged down 0.2% but remained near record highs of $2,463.05 as of 10:22 am GST Wednesday, whereas gold futures inched up 0.1% to $2,470.30 around the same time.
State treasuries reported gains that had driven 10-year US yields down to their lowest levels in four months following the US Federal Reserve Chair Jerome Powell stating that the slowdown in the latest inflation figures "add somewhat to confidence" that consumer prices are becoming increasingly manageable, reported Reuters Wednesday.
Federal funds futures have fully priced a US interest rate reduction for September and expect two additional cuts before the end of January 2025, said the Reuters report.
While ten-year yields remained stable at approximately 4.2%, two-year yields floated around the 4.4% figure, it added. Overall, bond markets in Australia, Japan, and South Korea all rallied.
Lower yields pushed gold prices up a steep incline overnight and via chart resistance to about $2,450 per ounce despite a mostly steady dollar. Gold prices soared to a record high of $2,478 in Asia trade on Wednesday, noted Reuters.
"Gold's ability to find support in any condition this year is worth highlighting," Vivek Dhar, a commodity strategist at Commonwealth Bank of Australia, told Reuters
"While we think gold prices face uncertainty in coming months, we think the uncertainty has a positive skew, raising the risk that gold rises above our forecast of $2,500/oz by the end of the year," he added.
The next US Federal Reserve monetary policy meeting is scheduled to take place at the end of this month from July 30–31.
The size of the global gold market is estimated at 4.4 kilotons in 2024 and forecasted to climb to 6.3 kilotons by 2029, while growing at a compound annual growth rate (CAGR) of 7.4% during the 2024–2029 projection period, as per Mordor Intelligence.
Worldwide demand for gold, including gold bought over the counter (OTC) by investors, rose 3% year-on-year to reach 1,238.3 tons in the first quarter of 2024. This marked the strongest first-quarter gold demand growth seen since 2016, according to a report published in late April by the World Gold Council (WGC).
