Investors have started buying Gold on expectations of the Fed’s rate-cutting cycle, which should see higher Gold prices, given that lower rates are historically positive for non-interest bearing bullion. That being said, swaps traders are still pricing little prospect of the Fed lowering borrowing costs before June, after recent data reaffirmed US exceptionalism. 

We continue to believe that the short-term moves will remain tied to data potentially influencing Fed decision-making while downside to the price will be limited by robust support from the other two channels (supportive central bank demand and bullion’s role as the geopolitical hedge of last resort).