Mining
Monday, April 1st, 2024 2:52 pm EDT
Key Points
- Gold prices reached a record high driven by expectations of a U.S. interest rate cut and its safe haven appeal.
- Market speculators gain confidence in Fed cuts, with expectations of rate reduction in June.
- Overseas demand, particularly from China, and robust central bank purchases fuel the gold rally amidst geopolitical risks and weakening dollar.
Gold prices reached a new record high driven by expectations of a U.S. interest rate cut and the metal’s status as a safe haven asset. Spot gold climbed 0.2% to $2,235.59 per ounce, while U.S. gold futures rose 0.8% to $2,257.80 per ounce. Market strategist Joseph Cavatoni highlighted the confidence in Fed cuts as a key factor behind gold’s surge. Analysts anticipate a rate cut by the U.S. Federal Reserve in June, despite February’s inflation gauge rising 2.8% year-on-year, which could delay rate adjustments. Although the Fed maintained rates at its recent meeting, it still forecasts three rate reductions this year. Gold prices typically move inversely to interest rates, making the metal more attractive in low-rate environments. Overseas demand, particularly from Chinese private investors seeking refuge from a struggling real estate sector and weak economy, also boosted bullion prices. Central banks globally continue to bolster gold purchases to diversify reserves amid geopolitical uncertainties and dollar weakness. China leads both in consumer demand and central bank acquisitions. Despite the strong case for ongoing purchases, Cavatoni cautioned on the size and duration of future acquisitions.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/04/01/gold-prices-hit-new-record-high-on-fed-cut-expectations.html
