(USNewsMag.com) – Amid expectations of U.S. interest rate cuts, gold reached another record high as more investors look for safe places to park their money in an increasingly uncertain market.
Spot gold prices rose by 0.2% on Monday, April 1st, trading at $2,235.59 an ounce, and gold futures in the U.S. rose by 0.8% to $2,257.80 an ounce. Those numbers increased even more the following day, to around $2,260 and $2,280 respectively.
A World Gold Council market strategist, Joseph Cavatoni, said it was an “exciting moment in gold.” He told CNBC that what he believes is driving the spike is that “many market speculators” are becoming more confident because of the expected cuts to interest rates. Many expect the Federal Reserve to make these cuts in June.
Recent data released on Friday, March 29th, shows that the key inflation gauge rose by 2.8% in February from where it was a year before, which could keep the Fed on hold for cut considerations. Interest rates have a direct impact on gold prices, and the two rates often have an inverse relationship. A dip in interest rates tends to correspond with a rise in gold prices as investors become more comfortable.
According to Caesar Bryan, a Gabelli Funds portfolio manager, another factor driving gold bullion prices higher is overseas demand. Bryan said that private investors in China are drawn to gold because the country’s “real estate sector has done poorly.” He also said the general economy in China has also been weak, and that its currency and stock market has been performing badly.
Cavatoni also noted the overseas influence of central banks from around the world, which have made large purchases to diversify their respective portfolios in the face of various geopolitical concerns and risks, including the weakening U.S. dollar and high inflation rates. How long the buying spree will last remains to be seen, he added.
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