On Wednesday, gold got an additional fillip as the dollar fell after Fed
Chair Jerome Powell indicated a rate cut later this year.
Gold suffers when high U.S. interest rates raise returns on competing assets such as bonds and boost the dollar, making the bullion costlier to buy with foreign currencies. ,
"There's definitely been
macro data that's pushed us in this direction and the follow on to policy expectations from the Fed... but the response in the gold market has been multiples of what long-term fair value models suggest," said Michael Hsueh, FX & Commodities Strategy analyst at Deutsche Bank.
Traders now see a 70% chance for a June Fed rate cut.
"CTAs are now firing long on all cylinders in gold, with funds holding roughly 80% of their historic max long position," Ryan McKay, senior commodity strategist at TD Securities, said in a note.
Platinum rose 2.4% to $901.85 per ounce, while palladium gained over 10% to $1,042.83.
Palladium seems to have attracted another round of 'big buying" from funds, with some of it very technical, said Bart Melek, head of commodity strategies at TD Securities.
Waning
appetite for EVs might be a bit of a lifeline as well, Melek added.
The auto sector accounts for 80% of the demand for palladium, which fell 39% in 2023 due to its replacement with cheaper platinum in autocatalysts, curbing emissions and rising market share of electric vehicles.