Expectations that U.S. interest rates will be lowered and the metal’s appeal as a safe haven asset helped gold prices keep going up and reach another record high on Monday.
Gold prices in the spot market went up by 1.32 percent to $2,265.53 an ounce. Over 2% more gold was bought and sold in the U.S., at $2,286.39 an ounce.
A market analyst at the World Gold Council told CNBC on Monday, “I think it’s a really exciting time in gold.” “What I think is driving it is that many market speculators are getting trust and comfort from the Fed cuts,” he said.
People who follow the market think that the U.S. Federal Reserve will lower interest rates in May or June.
According to data released last Friday, the key Fed inflation gauge for February rose 2.8% year-over-year. This means that the U.S. central bank is likely to keep interest rates the same before it starts to think about cutting them.
When the Fed’s March meeting was over, they didn’t change interest rates, but they did stick to their prediction that rates would go down three times this year.
The price of gold usually goes down when interest rates go up. With interest rates going down, gold becomes a better investment than fixed-income assets like stocks, which would give lower returns when interest rates are low.
Caesar Bryan, portfolio manager at Gabelli Funds, an investment management business, says that demand from other countries also pushed up the price of gold.
Bryan said, “In China, private investors have been drawn to gold because the real estate market has done badly.” He also said that China’s economy as a whole has stayed weak and that the country’s stock market and currency have not been doing well.
Cavatoni from the World Gold Council said that the strong purchases of gold by the world’s central banks have been a big part of the gold rally so far. These banks are trying to diversify their reserve portfolios because of geopolitical risks, internal inflation, and the weak U.S. dollar.
“Really strong reason for them to keep buying…” However, let us see if they stay that big for as long,” he said.
