Gold prices reach new highs as investors anticipate potential rate cuts from the U.S. Federal Reserve, boosting the metal’s appeal as a safe haven asset. Overseas demand and robust central bank purchases further drive the rally, highlighting gold’s role as a hedge against geopolitical risks and inflation.
1. Spot gold rises 1.32% to $2,265.53 per ounce, while U.S. gold futures climb over 2% to $2,286.39 per ounce.
2. Market speculators gain confidence in potential Fed rate cuts expected in May or June, driving increased interest in gold as a hedge against economic uncertainty.
3. The Fed’s recent inflation data, showing a 2.8% year-on-year increase in February, supports expectations for rate cuts to stimulate economic growth.
4. Gold prices typically exhibit an inverse relationship with interest rates, becoming more attractive as rates decline and fixed-income assets offer weaker returns.
5. Overseas demand, particularly from private investors in China, contributes to the gold rally, driven by concerns over the real estate sector and overall economic performance.
6. Central banks worldwide continue to bolster gold purchases to diversify reserve portfolios and mitigate geopolitical and inflationary risks, with China leading both consumer demand and central bank acquisitions, according to World Gold Council data.
