Even though statistics indicated a minor increase in a crucial inflation report, gold touched yet another new record high on Monday as investors became more optimistic that the Federal Reserve will lower interest rates this year.
This year, the US central bank has hinted at loosening credit conditions, which has led to a solid buying interest in precious metals.
According to Bloomberg News, it reached a fresh high of $2,256.44 on Monday.
The Fed’s preferred measure of inflation, the closely monitored personal consumption expenditures (PCE) index, showed a little on-year increase in March compared with February on Friday, even though the core reading decreased slightly.
Powell added that the data was “pretty much in line with our expectations” and that the two percent long-term inflation objective set by policymakers would be achieved.
Although the Fed would have preferred lower inflation rates, he stated that February’s numbers were “definitely more along the lines of what we want to see.”
Traders’ expectations for a June interest rate cut were unaffected by the report, while Powell cautioned that rates would not likely drop to the levels observed during the 2008 global financial crisis.
The desire for it as a safe haven during turbulent times is driving up prices due to escalating geopolitical tensions and worries that Israel’s conflict on Hamas in Gaza will spread.
Tensions increased after Israel claimed to have “eliminated” the head of a Hezbollah missile unit during an airstrike in Lebanon on Sunday.
For months, Israel and the organization supported by Iran have been firing cross-border gunfire almost every day.
In the meantime, traders are closely monitoring developments in the protracted conflict in Ukraine.
Since bullion doesn’t pay interest, it gains from lower borrowing costs from central banks since investors find it more appealing as a safe haven.
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