Gold prices fall further from record highs as dollar reigns after SNB cut
Investing.com-- Gold prices fell in Asian trade on Friday, retreating further from record highs hit this week as a sharp uptick in the dollar, following a surprise interest rate cut by the Swiss National Bank, pressured metal markets.
The yellow metal had surged to record highs above $2,200 an ounce after the Federal Reserve maintained its outlook for at least three interest rate cuts in 2024. But the yellow metal spent little time at these highs, as the dollar rebounded sharply on dovish signals from other major central banks.
Spot gold fell 0.4% to $2,173.62 an ounce, while gold futures expiring in April fell nearly 0.5% to $2,174.90 an ounce by 00:28 ET (04:28 GMT).
Pressure on gold came chiefly from sharp gains in the dollar, with the dollar index hitting a three-week high above the 104 level.
The greenback shot up as a surprise rate cut from the SNB, coupled with dovish signals from the Bank of England, left the greenback as the only major high-yielding, low risk currency.
Signs of resilience in the U.S. economy- following an upbeat outlook from the Fed and strong purchasing managers index data- also kept traders geared heavily towards the dollar.
This notion pressured metal markets, given that investing in precious metals such as gold offers no direct yields.
Strength in the dollar is also expected to limit any major upside in bullion, at least until the Fed begins trimming interest rates later this year. The central bank is still pegged to cut rates by 25 basis points in June, according to the CME Fedwatch tool.
An eventual lowering in interest rates is expected to benefit bullion prices later this year, with Citi analysts setting a year-end price target of $2,300 an ounce for the yellow metal.
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