Gold price races to year high after US data disappointment

Spot gold rose 1.9% to $2,021.65 per ounce by 12:05 p.m. ET, reaching its highest level in a year. The precious metal is now roughly $50 away from trading at an all-time high. US gold futures also gained 1.9% to $2,038.80 per ounce.

“We’re in this very positive backdrop for gold in which we have the slowing of economic data along with inflationary pressures remaining elevated,” said David Meger, director of metals trading at High Ridge Futures, in a Reuters note.

Burnishing gold’s appeal, especially amongst traders holding other currencies, the dollar added to its losses after data showed US job openings in February dropped to a near two-year low, while factory orders also dipped.

Commodity research consultants at CPM Group recently predicted that gold demand will stay elevated due to the economic conditions reminiscent of the outset of a recession. “Our expectation is that a recession will likely occur in 2024,“ said CPM managing partner Jeffrey Christian in a webcast.

A surge in oil prices this week after a surprise output cut by OPEC+ has helped bullion shake off the usual pressure from the likelihood of interest rate hikes that could be implemented to combat inflation.

“From a technical perspective, the gold price is likely to remain strong and stabilize at its current level or even higher. The $2,050 mark could act as an important resistance level, and if breached, prices could quickly soar towards its all-time high,” said Alexander Zumpfe, a precious metals dealer at Heraeus.

Markets now see about a 40% chance of the Federal Reserve hiking rates by a quarter basis point in May, with a roughly 60% chance of a pause.

But Han Tan, chief market analyst at Exinity, said more rate hikes could cause gold to unwind some of its recent gains.