Source : Kitco News – 2024.03.29
The gold market continues to be an unstoppable juggernaut as it closes out the month and quarter near a record high, solidly above $2,200 an ounce.
Analysts note that gold’s performance on Thursday, which wraps up a shortened trading week ahead of the Easter long weekend, is even more impressive when compared to the U.S. dollar Index, which is trading near a six-week high above 104 points.
Gold prices last traded at $2,241 an ounce, up 2.7% from last week. For the month, gold is up 9%, and for the quarter, the precious metal is up 8%.
Gold’s further push into blue sky territory also comes ahead of important inflation data. Although markets are closed for Easter, it is not a recognized government holiday, so the U.S. Bureau of Economic Analysis will be releasing its Personal Consumption Expenditures (PCE) Index. According to consensus estimates, economists expect inflation to have risen 0.3% in February.
Some analysts have said that gold is attracting new momentum because inflation is less of a threat than it was. Last week the Federal Reserve signaled that it still looks for three rate cuts this year even as they see inflation holding above its 2% target.
Darin Newsom, Senior Market Analyst at Barchart said that the gold rally is a signal that investors are worried that the Federal Reserve won’t be able to get inflation under control as it starts to cut interest rates.
He added that he also sees gold well supported as a geopolitical risk hedge.
“Geopolitical fears are still out there and will only continue to grow as we approach the November U.S. election,” he said. “If the Fed starts cutting rates, bond yields will fall, which makes gold a more attractive safe-haven.”
At the same time, some analysts note that the U.S. dollar is losing its grip on the gold market as U.S. government debt continues to spiral higher.
“Gold is not expensive. The truth is that the U.S. dollar is cheap as the government floods the global economy with it,” said Julia Khandoshko, CEO at the European broker Mind Money, in an interview with Kitco News.