By NewsBlogger Gold prices have surged to all-time highs near $2,230 per troy ounce due to light trading volumes on Good Friday and market sentiment leaning towards major central banks initiating an interest rate-cut cycle. Investors anticipate three rate cuts from the US Federal Reserve, and ongoing geopolitical tensions in the Middle East are contributing to the appeal of safe-haven assets like gold.
At a glance
- Gold price reaches all-time highs near $2,230 per troy ounce.
- Investors anticipate three rate cuts from the US Federal Reserve.
- Geopolitical tensions impact gold prices, with ongoing conflicts in the Middle East.
- Traders expect Fed interest rate cuts to weaken USD and make gold more attractive.
- Lower inflation expectations and economic concerns drive the rise in gold prices.
The details
Gold price has recently reached all-time highs, hovering near $2,230 per troy ounce.
This surge in price is attributed to light trading volumes on Good Friday and market sentiment leaning towards major central banks initiating an interest rate-cut cycle.
Investors Anticipating Rate Cuts
Investors are anticipating three rate cuts from the US Federal Reserve, with Chicago Fed President Austan Goolsbee expecting three cuts while emphasizing the need for more evidence of inflation subsiding.
European Central Bank policymaker Francois Villeroy believes that achieving the ECB’s inflation goal of 2% is feasible. At the same time, ECB executive board member Fabio Panetta states that conditions to begin easing monetary policy are emerging.
The Swiss National Bank unexpectedly cut rates at its March meeting, and the Bank of Japan is expected to maintain an accommodative stance for the foreseeable future.
Geopolitical Tensions Impacting Gold Prices
In the geopolitical arena, the United Nations Security Council passed a resolution urging a ceasefire between Israel and Hamas, but the conflict in the Gaza Strip continues unabated.
The Palestinian Red Crescent reported that Israeli forces besieged two Gaza hospitals, heightening tensions in the region and boosting demand for safe-haven assets like Gold.
Additionally, the yellow metal’s price (XAU/USD) has neared record highs around $2,230 during the Asian session on Friday, driven by safe-haven flows amidst economic concerns and potential Fed interest rate cuts.
Traders are anticipating three rate cuts from the US Federal Reserve this year. Last week, the Fed held the benchmark overnight borrowing rate steady at 5.25%-5.50% for the fifth consecutive time.
There is a 63% probability of the Fed cutting interest rates in June, which could weaken the USD and make gold more attractive to investors holding other currencies.
The ongoing geopolitical risks in the Middle East, including Israeli forces besieging two Gaza hospitals, further contribute to the appeal of traditional safe-haven assets like gold.
However, hawkish Fed comments and strong US economic data may impact the gold price. Some Fed officials are cautious about easing too soon and predict fewer rate cuts than previously estimated.
The focus is also on the US February Personal Consumption Expenditures Price Index (PCE) data, with the core PCE, the Fed’s preferred inflation gauge, which is expected to show a 0.3% increase in February.
Overall, the rise in gold prices is driven by expectations of lower inflation, as economists at ANZ Bank analyze the outlook for gold.
ANZ Bank suggests that a pushback in rate cut expectations from March to June may limit the rally of XAU/USD.
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| fxstreet.com |
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| – Gold price reaches all-time highs near $2,230 per troy ounce – Trading volumes are light due to Good Friday – Market sentiment leans towards major central banks initiating an interest rate-cut cycle – Investors anticipate three rate cuts from the US Federal Reserve – Chicago Fed President Austan Goolsbee expects three cuts but emphasizes the need for more evidence of inflation subsiding – European Central Bank policymaker Francois Villeroy suggests achieving the ECB’s inflation goal of 2% is feasible – ECB executive board member Fabio Panetta states that conditions to begin easing monetary policy are emerging – Swiss National Bank unexpectedly cut rates at its March meeting – Bank of Japan is anticipated to maintain an accommodative stance for the foreseeable future – United Nations Security Council passed a resolution urging a ceasefire between Israel and Hamas – Conflict in the Gaza Strip continues unabated – Palestinian Red Crescent reported Israeli forces besieged two Gaza hospitals – Geopolitical tensions have heightened demand for safe-haven assets like Gold |
| fxstreet.com |
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| – Gold price (XAU/USD) nears record highs around $2,230 during Asian session on Friday – Yellow metal uptick due to safe-haven flows amidst economic concerns and potential Fed interest rate cuts – Investors anticipate three rate cuts from US Federal Reserve (Fed) this year – Fed held benchmark overnight borrowing rate steady at 5.25%-5.50% for fifth consecutive time last week – Traders pricing in 63% odds of Fed cutting interest rates in June – Lower interest rates generally weaken USD, making gold cheaper for investors holding other currencies – Ongoing geopolitical risk in Middle East may boost traditional safe-haven assets like gold – Israeli forces besieged two Gaza hospitals, according to Palestinian Red Crescent – Hawkish Fed comments and strong US economy data could impact gold price – Fed officials cautious about easing too soon, some predicting fewer rate cuts than previously estimated – US February Personal Consumption Expenditures Price Index (PCE) data to be in focus on Good Friday – Core PCE, Fed’s preferred inflation gauge, expected to show 0.3% increase in February |
| fxstreet.com |
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| – Gold has been increasing in value recently – Expectations of lower inflation have contributed to the rise in gold prices – Economists at ANZ Bank are analyzing the outlook for gold – ANZ Bank suggests that a push back in rate cut expectations from March to June may limit the rally of XAU/USD |
