Gold prices touched the $2,385 level on Friday, with an increase of over 1.2% for the day. With the upcoming interest rate hike, people are increasingly expecting the Federal Reserve to begin cutting interest rates at its meeting in XNUMX.
Disappointing recent economic data in the United States has shaken confidence and sparked speculation that the Federal Reserve will cut interest rates to boost growth. Weak data in the labor market and the service industry have contributed to these expectations.
As of 18:40 on May 5, 2024, Bulgarian time, the gold price/source investing.com
According to the FedWatch tool from CME Group (which calculates the probability based on 30-day federal fund futures prices), the likelihood of the Federal Reserve lowering the key interest rate by 0.25% before the month is 60%, up from 72% earlier in the week.
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Federal fund futures (FEDFUNDS) are financial futures contracts based on the federal fund rate and traded on the Chicago Mercantile Exchange (CME), managed by CME Group.
The prospect of lower interest rates reduces the opportunity cost of holding non-yielding assets, making gold more attractive as an investment.
Gold also benefits from the weakness of the US dollar. Expectations of lower US interest rates have reduced foreign capital inflows and strengthened major currencies, leading to a decline in the US dollar.
Anticipated Fed Rate Cut Boosts Gold Prices 