Precious metals markets saw a notable rebound during trading on Wednesday, with gold and silver prices rising in spot transactions, recouping some of the losses incurred in previous sessions. This rise was supported by technical buying and investors' flight to safe havens, coinciding with thin trading volumes due to the Lunar New Year holiday, which closed several major Asian markets.
In detail, spot gold rose 0.2% to $4,886.69 an ounce, recovering from its lowest level in over a week, which it reached in the previous session after a decline exceeding 2%. Meanwhile, US gold futures for April delivery remained stable at $4,904.50, reflecting a cautious outlook in global financial markets.
The economic context and the Federal Reserve's anticipation
This price movement comes amid a complex economic environment, with the US dollar continuing to make relative gains, which typically puts downward pressure on commodities priced in the greenback. However, investors and economic analysts are focused on the minutes of the Federal Reserve meeting (the US central bank) for clearer signals regarding the future course of monetary policy. Current market expectations point to the possibility of three interest rate cuts this year, each by 25 basis points.
Historically, the relationship between interest rates and gold has been inverse; lower interest rates reduce the opportunity cost of holding the yellow metal, which does not generate a periodic return, making it more attractive to investors compared to bonds and other debt instruments. Therefore, any hint from the Federal Reserve about when it will begin easing monetary policy will have a direct and immediate impact on the movement of precious metals.
Performance of other metals and safe havens
As for other metals, silver saw mixed performance during the session. Data indicated a 0.8% decline to $72.86, while other indicators in spot trading showed a strong 3% jump to $75.68 per ounce, reflecting sharp fluctuations and strong buying interest at support levels. Platinum also rose by 0.9% to $2,025.80, and palladium increased by 0.5% to $1,690.54.
This collective rise in metal prices is particularly significant given ongoing concerns about global inflation and currency market volatility. In times of economic and geopolitical uncertainty, investors traditionally turn to gold and silver as hedges and stores of value, which explains the renewed demand despite the current strength of the dollar.
