The precious metal rose to an unprecedented level on Thursday with declines in the US dollar and bond yields, after the Federal Reserve maintained its forecast for three interest rate cuts this year.
Gold is approaching an 8% gain this month after breaking through the USD 2,200 levels.
The US central bank kept interest rates on Wednesday, but policymakers indicated that they still expect to cut them by three-quarters of a percentage point by the end of 2024, Jerome Powell also said that the recent high inflation readings have not changed the basic scenario of a slow easing of price pressures in the United States.
Despite the decline in gold last week, the week before last, it was able to record a new peak before it broke through yesterday, and the expectations of gold rising more is still the current view now, but it is strange that these sudden rises come at a time when interest rates have not been trending down yet, and the yields of 10-year Treasury bonds, despite their decline after the decision now, they are still trading at 4.25% today, which is about 40 basis points higher than at the end of December.
Traders have also settled on the commitment to the June rate cut by the Fed and the European Central Bank, at the same time the Bank of England is also feeling good about the August rate cut.
Thus, gold can find comfort from this and continue to rise further as long as inflation developments remain the same, but if we see more stubborn price pressures instead it is possible to expect the opposite reaction.
It seems that gold is ready to settle in a new range and dealing with it now will be buying with each decline.
