Gold might have its greatest year since 2020 as chances of a Fed rate decrease increase

 Gold might have its greatest year since 2020 as chances of a Fed rate decrease increase

Gold might have its greatest year since 2020 as chances of a Fed rate decrease increase

After prices reached an all-time high of $2,135.40 on December 4, bullion has risen almost 14% so far this year, putting it on course for its largest annual gain since 2020.

At 1003 GMT, spot gold increased by 0.02% to $2,065.29 per ounce. US gold futures, however, dropped 0.4% to $2,074.40 an ounce.

With expectations that the US Federal Reserve may begin loosening its monetary policies as early as March of next year, gold prices increased on Friday and are expected to have their best year in the previous three years.

At 1003 GMT, spot gold increased by 0.02% to $2,065.29 per ounce. US gold futures, however, dropped 0.4% to $2,074.40 an ounce.

After prices reached an all-time high of $2,135.40 on December 4, bullion has risen almost 14% so far this year, putting it on course for its largest annual gain since 2020.

According to Daniela Sanpaolo, economist at Intesa Sanpaolo, "gold can make trades mostly in the $1,950-$2,150 range in the near term, influenced by macroeconomic conditions reports and correlated expectations about approaching cuts in US interest rates, as well as geopolitical risks." entails instability owing to unforeseen developments." Corsini.

Experts predict that while markets brace for an interest rate decrease as early as next year, gold's current surge, fueled by a weak US dollar and Treasury rates, might last until 2024.

"In case of bullish expectations regarding the Fed's monetary loosening and an unforeseen spike in geopolitical risks, gold could set record-breaking levels, with $2,300 a possible maximum," Corsini said.

Low interest rates put pressure on the currency and lower the opportunity cost of owning non-yielding bullion.

The dollar index lost ground and was on track to drop by 2% in 2023, wiping off significant gains made in the previous two years. The yield on 10-year Treasury notes is still at its lowest point since July, despite a little increase.

Spot silver dropped 1% to $23.6901 per ounce, marking a 1% yearly decrease.

Palladium dropped 1.5% to $1,115.62 an ounce, while platinum slipped 0.1% to $1,001.06 an ounce. Palladium had the largest reduction since 2008, falling by about 38%, whereas both autocatalytic metals were expected to decline annually.