With growing expectations for U.S. monetary easing and ongoing support for bullion from central bank purchases and safe-haven demand, gold surged to a new record high on Thursday, continuing its record run this week.
After reaching a new high of $2,164.09 during the Asian trading hours, spot gold prices rose 0.4% to $2,156.93 per ounce as of 02:00 p.m. ET (1900 GMT). Futures on gold in the US finished at $2,165.2, up 0.2%.
According to Powell, the Federal Reserve is "not far" from gaining sufficient confidence to begin cutting interest rates once inflation reaches the central bank's 2% target. According to the CME’s Fedwatch Tool, traders are now predicting a 74% probability of a rate drop in June, up from approximately 63% on February 29.
Bullion becomes more affordable for buyers abroad in a low-interest rate environment because the opportunity cost of storing gold that does not yield is reduced and the currency is depreciated. Market strategist Joseph Cavatoni of the World Gold Council said that speculation about interest rate cuts is the main factor influencing gold prices.
Cavatoni further noted that the purchasing of gold by central banks is still going strong. This coming Friday, the US will release data on non-farm payrolls, which might provide more market direction.
During the Indian wedding season, physical market consumption was anticipated to be dampened by the price spike. However, major buyer China may witness sustained safe-haven demand.
A precious metals analyst at HSBC named James Steel claimed that geopolitical concerns are another key factor pushing bullion prices upward. "We only have a narrow group of assets that investors can really call safe haven, and gold is number one amongst them."
Since the beginning of the Israel-Hamas war, the price of gold has risen above $300 per ounce. Nevertheless, riskier asset rallies have occurred in tandem with gold's most recent upswing. The price of platinum increased 1.3% to $919.00/oz, while the price of silver increased 0.6% to $24.31.
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