News Digest:

Statements from the Fed chairman Jerome Powell on an impending interest rate cut have fueled gold demand which extended its record bull run. Tailwinds for bullion from central bank purchases and safe-haven demand also contributed to this spike, says a report.

Traders were pricing in a 74% chance of a June rate cut as against around 63% during the last week of February amidst statements from Powell that the Fed was not far from getting the confidence that inflation was headed to its targeted 2%.

Takeaway:

A low-interest environment reduces the opportunity cost of holding non-yielding gold and weighs on the dollar, making the yellow metal cheaper for overseas buyers. The World Gold Council too is banking on rate cuts to drive up gold demand as central banks are already making strong purchases. Another reason for driving up bullion prices is the global geopolitical risks as gold climbed over $300 since the start of the Israel-Hamas war.

End Notes

Source: https://www.reuters.com/markets/commodities/gold-extends-rally-hit-new-record-powell-hints-rate-cut-2024-2024-03-07/