Gold prices topped US$2,200/oz this week in a record high after the Federal Reserve maintained its outlook for at least three rate cuts this year, according to Bloomberg.
Spot gold was up 0.8% at US$2,203.09/oz, as of 04:57 GMT, after surging to highs of US$2,222.39 earlier in the session, and US gold futures jumped 2.1% to US$2,205.40.
Policymakers held their outlook for the cuts in 2024, moving toward slowing the pace of reducing their bond holdings. While Jerome Powell, Fed chair, maintained that officials would like to see more solid evidence that prices are coming down, he also said it will be appropriate to start easing at “some point this year.”
The price of gold bullion has set a series of record highs this month, partly driven by scaling expectations for a looser US monetary policy— an environment which typically benefits the non-yielding precious metal.
Speculation around the timing of the Fed’s long-anticipated pivot to rate cuts may have provided the trigger for the latest gains, with data showing that traders boosted their net long positions on gold last week by the most since 2019.
Once interest rates fall, the yellow metal is set to rally as bullion-backed exchange traded funds likely increase their holdings following months of outflows, according to UBS Group AG.
Further, substantial purchases by central banks in emerging markets led by China, heightened geopolitical risks, and the upcoming US election have underlined the commodity’s appeal as a haven asset.
