The price of gold surged to a new record high, exceeding $2,300 per ounce, driven by growing expectations that the Federal Reserve will implement interest rate cuts this year. This optimism, coupled with continued demand from central banks, propelled bullion prices to unprecedented levels.
While briefly touching $2,304.96 per ounce, gold stabilized as investors found reassurance in Federal Reserve Chair Jerome Powell’s recent remarks. Powell suggested that it would likely be appropriate for the Fed to initiate interest rate cuts “at some point this year,” providing further support to gold prices.
Meanwhile, silver remained near its highest level in nearly three years, reflecting the broader bullish sentiment in the precious metals market. The prospect of lower interest rates typically benefits non-yielding assets like gold, contributing to its ongoing appeal among investors.
Since mid-February, gold has been on an impressive upward trajectory, setting new records each day this week. Investors are increasingly betting on gold’s potential to benefit from an anticipated shift in policy by the Federal Reserve. Additionally, heightened geopolitical tensions in regions such as the Middle East and Ukraine have provided further support to bullion prices.
Central banks have also played a significant role in bolstering gold demand, as highlighted by the latest data from the World Gold Council. In February, central banks continued to increase their gold holdings for the ninth consecutive month. Notably, China led the way in these purchases, with India and Kazakhstan also emerging as notable buyers in the market.
Overall, gold’s recent surge reflects a combination of factors, including investor sentiment surrounding Fed policy, geopolitical uncertainties, and sustained demand from central banks, all contributing to the metal’s ongoing rally.
Spot gold remained stable at $2,299.25 an ounce at 9:12 a.m. in Singapore, pausing its seven-day rally. This sustained advance has pushed the metal’s 14-day relative-strength index close to 83, surpassing the level of 70 that some investors interpret as an indication of overbought conditions.
Meanwhile, silver for immediate delivery showed minimal movement after reaching $27.3355 an ounce, marking its highest intraday level since June 2021. Palladium and platinum prices edged higher, contributing to overall positive sentiment in the precious metals market.
The Bloomberg Dollar Spot Index remained steady after a two-day decline, adding to the stable trading environment.
Investors are eagerly awaiting the release of nonfarm payroll data on Friday, which will provide further insights into the health of the US economy and potential monetary policy trajectories. Strong employment gains are anticipated, according to a Bloomberg survey, suggesting continued attention on economic indicators for market direction.
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