Gold prices jumped to a new high of above $2,200 an ounce on Thursday, following the US Federal Reserve maintaining its outlook for three rate cuts this year.
Bullion advanced to a record in early trading, before paring gains.
Prices of the yellow metal have been surging since mid-February, underpinned by long-standing support including heightened geopolitical risks and buying by central banks, led by China.
The rapid ascent has surprised many seasoned market observers, however, as there has not been a clear catalyst, Bloomberg reported.
The rally has been partially driven by expectations for looser monetary policy in the US, and that was reaffirmed by the Fed on Wednesday.
Chair Jerome Powell continued to highlight that officials would like to see more evidence that prices are coming down, but “it’s still likely in most people’s view that we will achieve that confidence and there will be rate cuts,” he said.
Speculation around the timing of the Fed’s long-anticipated pivot may have provided the trigger for recent gains, with data showing that traders boosted their net long positions on gold last week by the most since 2019.
The metal stands to benefit even more when US interest rates actually do come down, as bullion-backed exchange traded funds look likely to increase their holdings, according to UBS Group AG.
On the geopolitical front, there are a number of risks boosting gold’s allure as a haven asset.
Russia appears to be gaining the upper hand in its war in Ukraine, the Israel-Hamas conflict continues unabated and has led to a re-routing of global shipping, while the US presidential election at the end of the year could prove massively consequential for markets.
Chinese buying has also underpinned the market.
Besides the central banks, regular people have been stocking up on coins, gold bars and jewellery to safeguard their wealth from a years-long property downturn and losses in the country’s stock market.
Spot gold rose 0.7 percent to $2,201.94 an ounce in early trading hours in Singapore.
In India, hold prices jumped by as much as Rs 1,028 ($12.37) per 10 grams to hit a fresh lifetime high of Rs 66,778 ($803.39) on the commodity exchange MCX in the opening trade on Thursday.
Follow us on
