Gold prices smash records despite dollar resilience
2024-03-21
Summary:
Gold hit a record high Thursday after the Fed kept rates steady as anticipated, signaling potential for three cuts this year.
Gold prices surged to a record high on Thursday after the Fed left interest rates unchanged in a widely expected move and stayed on track for three rate cuts this year.
Chair Jerome Powell said recent high inflation rate readings had not changed the underlying "story" of slowly easing price pressures despite of its projection of slightly slower progress on inflation.
WGC said “central banks, who have bought historic levels of gold over the past two years, continue to be strong buyers in 2024.” These purchases have driven prices higher despite a strong dollar.
Strong physical demand for gold is also fuelled by its appeal as a safe-haven asset amid geopolitical uncertainties. France is preparing 2,000 troops to send them to Ukraine, the head of the Russian Foreign Intelligence Service said Wednesday.
Poland’s central bank was the second largest net consumer of gold as the war in Europe is next door. China maintained the top spot in both consumer demand and central bank purchase.
The world’s second largest economy overtook India to become the largest gold jewellery buyer in 2023. Chinese consumers bought 603 tons of gold jewellery, a 10% increase from 2022.
Bullion has breached the key $2,200 psychological level with the RSI reading further into overbought area. As such some profit-taking is in the cards in the short term while the support area is seen around $2,150.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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