Gold futures soared to an all-time high on Tuesday, fueled by monetary policy expectations, geopolitical tensions, and international economic prospects. The yellow metal rallied as Bitcoin also rocketed to a fresh record high. Could gold prices further enjoy massive movements in the financial markets?
April gold futures surged $14.10, or 0.66%, to $2,140.40 per ounce at 18:06 GMT on Tuesday on the COMEX division of the New York Mercantile Exchange. Gold prices have erased their year-to-date losses and are now up more than 3%. Over the last 12 months, the yellow metal has risen 16%.
Silver, the sister commodity to gold, pared its gains and turned negative. May silver futures shed $0.071, or 0.3%, to $23.92 an ounce. The white metal is close to eliminating its 2024 decline as it is down 0.5% year-to-date. Over the last 12 months, silver prices have jumped 13%.
The yellow metal closed the Monday session above $2,100 for the first time ever, and it is adding to its gains. On the day, there were two main factors: a weaker buck and falling Treasury yields.
The US Dollar Index (DXY), a gauge of the buck against a basket of currencies, dipped to 103.80. It is up 2.45% year-to-date. A weaker buck is good for commodities priced in dollars because it makes it cheaper for foreign investors to purchase.
US Treasury yields were down across the board, with the benchmark ten-year yield down 8.2 basis points to 4.137%. The two-year yield and the 30-year bond slumped to 4.552% and 4.276%, respectively.
Gold is sensitive to fluctuations in interest rates because it influences the opportunity cost of holding non-yielding bullion.
That said, there have been other contributors to the monumental rally in gold prices, including global economic risks, geopolitical strife, and Fed policy.
According to the CME FedWatch Tool, the futures market is now penciling in a 65% chance of a June rate hike, up from 55% a week ago. Investors have pushed back their expectations based on hotter inflation data and solid growth.
Meanwhile, the financial markets will pay close attention to key economic data, including the February jobs report, and Fed Chair Jerome Powell’s testimony in front of the House and Senate this week.
In other metal markets, April copper futures slipped $0.011, or 0.29%, to $3.846 per pound. April platinum futures declined $17.90, or 1.98%, to $886.40 an ounce. April palladium futures fell $17.90, or 1.84%, to $955.50 per ounce.