Gold gains sharply on anticipation of hefty Fed rate cut next year

economictimes.indiatimes.com:

Financial markets construed the much awaited Powell's speech Friday as decisively dovish as he did not seem to push hard against the markets' expectations of hefty rate cuts next year. Powell, in his speech at Spelman College, said that the Federal Reserve's monetary policy is in a restrictive territory and it is too early to time the Fed rate cuts.

He added that if appropriate, they are ready to hike rates further.

He was optimistic on consumer spending. Markets interpreted his remarks to be a clear indication that the Fed is done with hiking rates.

It is to be noted that Waller, a known monetary policy hawk, said earlier in the week that the Federal Reserve's monetary policy is well positioned to slow the economy and get inflation back to 2%.

He mentioned a possibility of lowering policy rates should inflation fall for several months. Seemingly dovish statements from the duo continued to push the yields and Dollar Index lower, which has fuelled rallies in almost all the asset classes.

COMEX gold futures settled at a record high Friday as spot gold was just shy of all-time high of $1976.

The two-year US yields fell to the lowest level since mid-June on Powell's remarks as the ten-year US yields slumped to the fresh cycle low.

Bond rally was fuelled further by US ISM manufacturing PMI data (November) coming in at 46.70 Vs the forecast of 47.80, which showed that manufacturing activity contracted for the thirteenth straight month, the worst stretch in the last two decades.

Spot gold closed with a gain of 1.79% to settle at $2072.12 Friday. The yellow metal has rallied 14% since it's October low.

Gold was up around 3.50% on the week. The ten-year US yields fell 2.80% to 4.208% Friday as the two-year yields fell 3% to