Powell remarks drive gold price to yet another record high

Gold price rises to new high above $2,300/oz on rate cut optimism

On Thursday, gold prices soared to another record high, breaking above the $2,300 per ounce mark, bolstered by comments from Federal Reserve officials that cemented market expectations around U.S. interest rate cuts.

By 0943 GMT, the spot gold price had decreased slightly by 0.3% to $2,291.65 per ounce after earlier reaching a record $2,304.09 during the session.

Meanwhile, U.S. gold futures experienced a modest decline of 0.2%, settling at $2,311.20.

Carlo Alberto De Casa, a market analyst at Kinesis Money, commented on the gold price dynamics to Reuters:

"There is big demand coming from Asia, particularly from China and solid demand from central banks. We have geopolitical risks and expectations around central banks cutting rates. All these factors are lifting gold prices higher”.

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Fed says more debate, data needed before first interest rate cut

Federal Reserve Chair Jerome Powell and other Fed officials continued focusing on the need for more debate — and data — before implementing interest rate cuts, a move financial markets largely expect to occur in June.

Market traders are now estimating a 59% likelihood of a rate cut by the Fed in June, as per CME FedWatch tool. The appeal of gold, which does not yield interest, rises when interest rates decrease, as that lowers the opportunity cost of holding the precious metal.

Attention is now turning towards the forthcoming U.S. non-farm payrolls data for March, expected on Friday, which could provide additional insights into the Fed's timeline for its initial rate cut.

Tai Wong, a New York-based independent metals trader, commented on the gold price dynamics to Reuters:

"Gold surged to yet another historic high on elevated trading volume after Powell stresses that 'bumps' in the road don't change the overall rosy picture. Powell's customary cautious approach doesn't worry gold bulls... I think bulls want to see $2,300 and I think more 'tourists' are getting involved in the trade”.

A significant increase in central bank purchases and sustained demand for gold as a safe haven amid escalating geopolitical tensions – particularly from China — have propelled the metal's value, with the gold price rising by over 25% since October. The Chinese central bank reportedly now holds close to 72.58 million troy ounces of gold — equivalent to about 2,257 tons.

In a note cited by Reuters, Singaporean bank OCBC offered a note of caution as to the gold price rally:

"Gold's blistering rally may have further room to run in the medium term. Historical evidence since 2001 showed that gold strengthened when Fed rate hike cycle ended and continued to extend its bullish run when Fed rate cut cycle gets underway. That said, we caution for the risk of a pullback”.

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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.