Gold Jumps Above $2,200 an Ounce for First Time on Dovish Fed
Gold surged above $2,200 an ounce for the first time as investors grew more confident about the Federal Reserve’s path for rate cuts, boosting the appeal of non-interest bearing bullion.
The precious metal rose as much as 1.6% to a record $2,220.89 in early trading, before paring those gains. Gold has rallied more than 10% since mid-February, as the outlook for looser US monetary policy triggered fresh bets on bullion by investors.
While the speed of gold’s rally caught some market watchers off guard, the Fed appeared to reaffirm those bullish expectations on Wednesday. The central bank maintained its outlook for three rate cuts this year, suggesting it isn’t alarmed by a recent uptick in inflation.
“What we saw last night was the green light really for gold traders to come back in,” said Chris Weston, head of research for Pepperstone Group Ltd. “The Fed have said that right now they’re tolerant of the inflation that we’ve seen, they’re tolerant that the labor market strength is not going to be the impediment.”
Gold’s gains over the past five weeks have also been underpinned by long-standing supports including heightened geopolitical risks and buying by central banks, led by China.
Gold has been trading for months around the $2,000 mark, a level only breached for the first time in 2020 as the global pandemic raged. Even more unusually, prices have traded at such elevated levels despite sky-high real interest rates that are typically bad for gold, which doesn’t pay interest.
