Gold sets another record high above USD2,300 per ounce

(MENAFN) Gold prices surged to unprecedented heights, exceeding USD2,300 per ounce, driven by expectations of interest rate cuts by the Federal Reserve and sustained demand from central banks. The precious metal reached a peak of USD2,304.96 before stabilizing as investors reacted to Federal Reserve Chairman Jerome Powell's remarks suggesting a possible reduction in borrowing costs later this year.

Powell's assurance that it may be appropriate to commence lowering interest rates provided reassurance to investors, contributing to the bullish sentiment surrounding gold. Lower interest rates typically bode well for non-yielding assets like gold, making it an attractive investment option.

Gold's remarkable rally since mid-February, with record-setting highs each day this week, reflects investor anticipation of the Fed's policy shift. Additionally, heightened geopolitical tensions in regions such as the Middle East and Ukraine have further bolstered gold's appeal as a safe-haven asset.

Central banks' continued accumulation of gold reserves, as evidenced by data from the World Gold Council, has also supported the upward trajectory of gold prices. China, India, and Kazakhstan were notable buyers in February, marking the ninth consecutive month of central bank gold purchases.

Despite gold's impressive ascent, some market observers remain puzzled by the lack of clear fundamental reasons driving the surge. Real United States interest rates have remained relatively high, typically posing a challenge for gold prices. Analysts caution that continued bullish momentum may lead to a correction or an "air pocket" in the market, highlighting the need for careful monitoring of market dynamics.

Kyle Rodda, Senior Market Analyst at Capital.Com, emphasized the absence of a clear fundamental catalyst driving gold's surge, underscoring the need for caution amidst the current market environment. As gold prices reach unprecedented highs, investors and analysts alike remain vigilant for potential shifts in sentiment and market dynamics that could influence future price movements.


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