New record for gold price

English Section / 2 aprilie

New record for gold price

Versiunea în limba română

The spot price of gold reached a new record level yesterday, on foreign markets, against the background of expectations related to the interest rate cut by the US central bank (Federal Reserve - Fed), but also of geopolitical tensions and solid demand for the yellow metal, coming from China, according to Bloomberg.

The spot price of gold rose to an all-time high of $2,265.73 an ounce, 1.6% higher than at the close of the last session last week, after already setting a series of records in recent sessions. Later, the quote was $2,250.07 an ounce.

The gold futures quote for delivery in June rose by 1.4% on the US Comex exchange, reaching $2,269/ounce at 07:20 local time.

Statistics released Friday showed that core US inflation, the Fed's favorite gauge for setting monetary policy, fell in February while consumption rose, according to Bloomberg. This development brings new arguments for a future reduction in borrowing costs.

More positive statistical data led to an increase of approximately 14% in the gold price starting from mid-February. The perspective of the monetary policy relaxation of the major central banks, as well as the increased tensions in the Middle East and Ukraine, supported the growth. There have also been significant purchases of gold by central banks, particularly that of China, where consumers have been hoarding gold amid problems in Asia's largest economy.

After the publication of figures on the evolution of inflation in the US in February, Fed President Jerome Powell said that the dynamics are "in line with expectations" and the Fed is not in a hurry to cut interest rates.

However, financial markets estimate that there is a 61% chance that the Fed will cut interest rates in June, compared to the 57% forecast at the end of last week. Lower interest rates are a positive for gold, a non-interest bearing investment for investors.

"Inflation data, and Powell's statements in particular, have provided a new boost to gold, and the market is becoming increasingly convinced that the Fed will start cutting interest rates in June," says Warren Patterson, analyst at ING Groep NV .

The positive prospects of gold were supported by a number of important banks. Among them, JPMorgan Chase & Co. estimated last month that the price of an ounce of gold could reach $2,500 this year. Also, analysts from Goldman Sachs Group Inc. I think there is potential for gold to reach $2,300 an ounce, in the context of low interest rates.

The US consumer price index rose 2.5% in February

The US Department of Commerce announced on Friday that the consumer price index in the US registered an increase of 2.5% at an annual rate in February, after an advance of 2.4% in January, in line with analysts' expectations. In contrast, core inflation, which excludes volatile food and energy prices, rose 0.3% month-on-month in February, following a 0.5% advance in January. Economists believe that core inflation is a better indicator when it comes to the future direction of inflation.

At an annual rate, core inflation increased by 2.8% in February, after an advance of 2.9% in January. The Fed's inflation target is 2%.

Giovanni Staunovo, UBS analyst, says as quoted by CNBC: "The US inflation figure, slightly lower than expected, supports the prospect of a Fed interest rate cut in the middle of the year. Continued solid demand helps the yellow metal, although higher prices could hurt jewelry demand."


According to Goldman Sachs, commodity prices will rise this year as central banks in the US and Europe cut interest rates, helping to support industrial and consumer demand. The quoted source shows that the price of copper, aluminum, gold and petroleum products could increase, and investors must be selective in this context, because gains will not be universal.

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