The price of gold continues to rise to record levels on expectations that U.S. interest rates will start to move lower later this year.
The price of spot gold gained 1.40% in premarket trading to reach $2,270.30 U.S. per ounce, an all-time high.
The price of gold has been steadily rising this year and hitting new record highs as markets double down on their expectation that the U.S. Federal Reserve will begin cutting interest rates in June of this year.
Gold is seen as a safe haven asset in times of economic and political turmoil, and central banks around the world have been buying more of the precious metal over the past year.
China’s central bank, in particular, has been aggressively buying gold over the past 12 months.
Gold prices tend to share an inverse relationship with interest rates. As interest rates decline, gold becomes more appealing compared to fixed-income assets such as bonds.
While futures markets are placing a 70% chance of the first interest rate cut in the U.S. happening in June, the timing might be thrown into doubt after the latest inflation reading.
The key Federal Reserve inflation gauge for March rose 2.8% year-over-year. That was inline with economists’ expectations but could keep the U.S. central bank on hold past June unless more progress is made on inflation in coming months, say some economists.
The U.S. central bank held interest rates steady at its March meeting but has retained its forecast of three interest rate cuts in 2024.
