Gold prices nudged up in mid-May, within sight of touching a fresh record peak, underpinned by Chinese stimulus measures and prospects for U.S. interest rate cuts later this year.
Current Gold and Silver Prices
Gold was up 1.5 percent at USD $2,414.50 per ounce on Friday May 17, not far off an all-time high of USD $2,431.29 touched on April 12.
Silver broke above the key USD $30 per ounce resistance to hit an 11-year peak.
Impact of Chinese Measures and U.S. Interest Rates
Gold received a boost after China announced measures to stabilise the crisis-hit real estate sector.
Also, sentiment that the United States is getting to grips with inflation, augured for possibly two quarter-point rate cuts from the U.S. Federal Reserve later this year, perhaps starting in November.
Favorable Climate for Gold
A climate of falling U.S. interest rates, can be seen as constructive for gold prices, as bullion bears no yield.
“I am bullish on gold for the coming week,” Colin Cieszynski, Chief Market Strategist at SIA Wealth Management, was quoted as saying by Kitco News on May 17.
“The U.S. dollar appears to be backing off a bit along with Treasury yields.
“Also, if it (gold) does break out over $2,400 resistance, technically that could open the door to a potential run at the $2,500 big round number.”
World Bank’s Outlook on Precious Metals
The World Bank expects its precious metals index to rise by 8 percent year-over-year in 2024.
“Stronger gold demand from emerging markets and developing economies (EMDEs), amid heightened geopolitical uncertainty, is a key upside price risk,” economists and analysts from the World Bank’s Prospects Group said.
Geopolitical Tensions and Gold Prices
Heightened geopolitical tensions in the Middle East have contributed to the strong upside in gold prices seen so far this year, analysts say.
The pound sterling rose against the U.S. dollar, in which gold prices are denominated, in the second week of May, with the market’s focus on the timing of a possible interest rate cut by the Bank of England, widely expected in June or August.
Upcoming Economic Data
The markets will closely track economic data due this week, including consumer-price inflation data due out on May 22, and “flash” PMI data on UK business activity scheduled for May 23.
Signs of a strengthening UK economy, and any possible renewed inflationary pressures, could delay a rate cut.
