Gold prices reach record levels
Gold prices have risen to record levels due to signs that the US Federal Reserve may cut interest rates. The increase is also due to geopolitical tensions and strong demand from China. This is reported by RBC-Ukraine with reference to Bloomberg.
Factors contributing to the rise
Many factors have contributed to the rise in gold prices by about 14% since mid-February. The prospect of interest rate cuts by major central banks, as well as escalating situations in the Middle East and Ukraine, supported this rally. Central banks actively bought gold, particularly in China, and consumers also maintained demand for it amid problems in Asia’s largest economy.
Market reactions and forecasts
After news of inflation, Fed Chairman Jerome Powell said the information «significantly meets our expectations» and there is no urgent need to lower rates. Swap markets assess the likelihood of an Fed rate cut in June at 61% compared to 57% on Thursday.
«Inflation data and Powell’s comments provided additional impetus for gold, as the market becomes increasingly convinced that the Fed will start lowering rates in June,» said Warren Patterson, head of commodity strategy at ING Groep NV.
China’s demand and future outlook
China’s demand for gold has been significant, with the Chinese central bank adding large amounts of ingots to its reserves every month for the past 16 months. Leading banks like JPMorgan Chase and Goldman Sachs Group support positive metal prospects, forecasting prices to reach $2500 per ounce and $2300 per ounce, respectively, this year.
Why Buy Gold
Gold is often bought as protection against inflation, amid geopolitical instability, or as an investment tool to diversify a portfolio. It also has a high level of liquidity and historical value.
