Gold firms on bets for early 2024 start to US rate cuts

Dec 26 – Gold consolidated gains on Tuesday, extending its climb for a third session on a weaker dollar and Treasury yields in a slow final week of the year, with traders expecting the Federal Reserve to cut US interest rates in early 2024.

Spot gold rose 0.3% to USD 2,059.79 per ounce by 2:10 p.m. ET (1910 GMT), near a more than two-week high of USD 2,070.39 hit in the last session. US gold futures settled mostly flat at USD 2,069.80.

Several markets were closed the day after Christmas for public holidays and trading is expected to remain muted the whole week.

“You may see speculators climb aboard early on the long side, thinking that the metals markets are due for some more upside action in the first quarter,” said Jim Wyckoff, senior analyst at Kitco Metals.

COMEX gold speculators raised their net long position by 20,365 contracts to 131,749 in the week to Dec. 19, data showed on Friday.

“The likely less restrictive monetary policies in 2024 will mean better commercial demand for precious metals,” Wyckoff said, adding that resurgent inflation or more economic weakness in top bullion consumer China could dampen his bullish outlook.

Traders were pricing in an 85% chance of a Fed rate cut in March, according to the CME FedWatch tool.

The dollar index hovered near five-month lows while benchmark US 10-year bond yields also fell.

Lower interest rates increase the appeal of non-yielding bullion and weaken the US currency, making dollar-priced gold more attractive for those holding other currencies.

“Spot gold should find adequate reasons to remain supported above the psychologically important USD 2,000 level, as long as the Fed can stay the course with its intended rate cuts next year,” said Han Tan, chief market analyst at Exinity Group.

Silver inched up 0.1% to USD 24.19 an ounce while palladium fell 1.9% to a one-week low of USD 1,179.60.

Platinum climbed 0.6% to USD 976.75, nearing highs since Sept. 1 in its sixth consecutive session of gains.

(Reporting by Deep Vakil and Hissay Ongmu Bhutia in Bengaluru; Editing by Chizu Nomiyama and Richard Chang)