Gold bars and coins.
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Gold prices extended their rise and hit a new record high on Monday, propelled by expectations of lower US interest rates and the appeal of the metal as a safe haven.
Spot gold added 1.32% to trade at $2,265.53 an ounce. US Gold Futures rose more than 2% to trade at $2,286.39 an ounce.
“I think it’s a really exciting time for gold,” Joseph Cavatoni, market strategist at the World Gold Council, told CNBC on Monday. “What I think is really driving this situation is that a lot of market speculators are really confident and feeling reassured by the Fed’s cuts,” he said.
Market observers expect the US Federal Reserve to cut rates in May or June.
The Fed’s key inflation gauge for February rose 2.8% year-on-year, according to data released last Friday, which is likely to keep the U.S. central bank on hold before it can begin considering policy changes. interest rate cuts.
The Fed maintained its stance on interest rates following its recent March meeting, but maintained its forecast of three interest rate cuts this year.
Gold prices over the past year
Gold prices tend to share an inverse relationship with interest rates. As interest rates fall, gold becomes more attractive than fixed-income assets such as bonds, which would produce lower returns in a low interest rate environment.
Bullion prices have also been pushed higher by foreign demand, according to Caesar Bryan, portfolio manager at investment management firm Gabelli Funds.
“In China, private investors have been attracted to gold because the real estate sector has performed poorly,” Bryan said, adding that China’s overall economy has remained weak and its stock market and currency did not perform well.
Gold’s rise so far has been fueled by massive buying by central banks around the world in an effort to diversify reserve portfolios due to geopolitical risks, domestic inflation and a weak dollar. American, said Cavatoni of the World Gold Council.
“Really strong case for them to continue buying… (but) let’s see if they continue to be this big and this long,” he added.
China is the main driver of consumer demand and central bank purchases of gold, according to WGC data.
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