Gold prices dipped on Wednesday but regained ground as hopes for a U.S. interest rate cut increased. Rate cut hopes fuel gold reflects the overall market sentiment throughout the day.
Spot gold dropped 0.2% to $3,308.32 per ounce by 1:58 a.m. ET. However, it remained on track to secure a fourth straight monthly gain. So far in April, gold prices have risen nearly 6%.
Earlier in the session, prices had fallen over 1%. Meanwhile, U.S. gold futures settled 0.4% lower at $3,319.10. But despite the dip, rate cut hopes fuel gold as traders respond to weaker economic signals.
According to new data, the U.S. economy contracted in the first quarter. Gross domestic product shrank at an annualized rate of 0.3%. Analysts believe businesses rushed imports ahead of potential tariffs from the Trump administration.
Metals trader Tai Wong shared his thoughts on the trend. He noted that gold is still in a strong bull market. He added that the latest data paves the way for potential Federal Reserve rate cuts. In his view, rate cut hopes fuel gold even as the market stabilizes after a recent rally to $3,500.
Traders now expect clearer signs of economic weakness by June. These signals could push the Federal Reserve to lower interest rates by a full percentage point before year-end.
Lower rates typically support gold because it doesn’t yield interest. Investors often turn to the metal during financial or political uncertainty. The metal last hit a record high of $3,500.05 on April 22.
In other data, the U.S. personal consumption expenditures (PCE) index remained flat in March. However, core PCE, which excludes food and energy, increased at a 3.5% rate.
Wong noted that gold ignored the soft PCE data. That’s because the earlier GDP surprise had already triggered strong price gains.
Traders now await Friday’s U.S. jobs report. It could influence the Fed’s next move on interest rates.
Elsewhere, China’s markets remain closed from May 1 to 5 for the Labour Day holiday. Meanwhile, silver fell 1% to $32.64, platinum dipped 1.2% to $965.30, and palladium rose 0.3% to $937.75.
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