Gold set for 4th weekly drop in five weeks

Spot gold has struggled to keep its head above the psychologically-important $2,000 level this week as markets diluted bets for Fed rate cuts.

This time last week, markets had fully priced in 50-basis points in Fed rate cuts by January 2024, but such odds have since been trimmed to an 93% chance.

The US dollar has been supported by recent hawkish Fed speak, which in turn has discouraged bullion bulls from pursuing greater heights.

Despite the recent pullback, the precious metal still holds a 9% year-to-date climb that has been largely predicated on its role as a safe haven, as markets kept a wary eye over recession and financial instability risks.

The prospects for a Fed rate cut occurring later this year also benefitted zero-yielding bullion.

Ultimately, markets have to be assured that the Fed is truly warming up towards a dovish pivot later this year.

The greater the likelihood of Fed rate cuts going into 2024, the greater the chances of spot gold staying above the $2k line, which in turn may set a stronger platform for the precious metal to revisit its all-time high.