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Gold extends rally above $2,160 ahead of US NFP

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The price of Gold extended its upside around $2,165 after reaching a record high during the early European session on Friday.

A weaker US Dollar and a decline in US Treasury bond yields provided some support. Furthermore, the rising expectation for the first rate cut by the Federal Reserve (Fed) in the June meeting boosted demand.

That said, the dovish commentary from central bank policymakers created a tailwind for the yellow metal.

Fed Chair Jerome Powell said the US central bank is “not far” from gaining enough confidence that inflation will reach its 2% target to begin lowering interest rates.

Investors will take more cues from the US nonfarm payrolls (NFP) data later on Friday for fresh impetus, which is expected to see 200,000 jobs added to the US economy. However, the stronger-than-expected data might lift the Greenback and exert some selling pressure on gold.

Meanwhile, European Central Bank chief Christine Lagarde indicated the ECB may ease policy in its June meeting.

The ECB maintained its benchmark rate unchanged at 4.0% at its March meeting on Thursday, but it lowered its inflation forecast for 2024 from 2.7% to 2.3%, indicating the central bank opened the door to possible rate cuts in the coming months.

Furthermore, Chinese investors purchased the yellow metal as a safe place to keep their cash after the property sector and stock markets in China tumbled. The escalating geopolitical tensions in the Middle East might be attributed to the demand for traditional safe-haven assets as well.

Gold traders will closely watch the Eurozone Gross Domestic Product (GDP) for the fourth quarter.

On the US docket, the February labour market data, including NFP, unemployment rate, and average hourly earnings will be released. Traders will take cues from the data and find trading opportunities around the gold price.

XAUUSD propelled by further dovish commentary – ANZ

Gold has reached a new all-time high above $2,160 and economists at ANZ Bank suggest that safe haven buying is also likely to be behind the move.

“Gold extended its record-breaking rally amid further dovish commentary from central bankers. Federal Reserve Chair, Jerome Powell, told a Senate panel the Fed is not far from being confident enough to cut rates. President Christine Lagarde indicated the ECB may ease in June. This came amid fresh projections showing inflation falling to 2% in 2025.

“Safe haven buying is also likely to be behind the move after a Houthi attack on a ship in the Red Sea led to the first confirmed deaths of crew.

While investors are still pulling metal out of Gold-backed ETFs, central banks remain strong buyers,” the ANZ Bank analysts concluded.

(Source: OANDA)