The gold rush has begun.
Bullion prices soared to record highs on Thursday as investors continued to pour money into precious metals after Fed Chairman Jerome Powell suggested the Fed would start cutting interest rates “at some point this year.” did.
Gold traded as high as $2,310 an ounce early Thursday morning, continuing an upward trend that has seen its value soar more than 25% over the past six months, outpacing the S&P 500 index, which rose 22% in the same period. Ta.
Meanwhile, silver prices reached a nearly three-year high, trading at $27.09 an ounce in the first week of April, up nearly 13%.
Gold and other precious metals are considered sound investments when interest rates are low because they don’t pay interest.
Analysts also see it as a smart hedge against inflation, as paper money loses value while the gold supply is limited.
Chairman Powell told a Stanford University audience on Wednesday that although recent data shows inflation remains high, there has been no “material change” to the Fed’s overall strategy for this year. Told.
Still, the central bank governor issued a warning.
“When it comes to inflation, it’s too early to tell whether recent readings represent anything more than just an increase,” Powell said.
He added that he and other Fed officials “do not believe it is appropriate to lower interest rates until we have greater confidence that inflation is sustainably declining toward 2%.” He added.
“Given the strength of the economy to date and the development of inflation, there is time for future data to guide policy decisions,” he said.
The UK-based international trade association World Gold Council said it expects the value of the precious metal to continue rising this year as central banks actively buy bullion.
Last year alone, gold consumption rose 3% to 4,899 tonnes, the highest since 2010.
“The situation is appropriate for emerging central banks to continue to be net buyers,” said Joseph Cavatoni, chief market strategist at WGC. told Bloomberg News.
Last week, the Core Personal Consumption Expenditure Index, the Fed’s preferred measure of inflation, rose 0.3% in February, or 2.8% from a year earlier, underscoring the difficulty of controlling prices.
After its meeting in March, the Federal Reserve kept interest rates at their highest levels in decades at between 5.25% and 5.50%, but said it expected to cut them three times this year.
Investors are betting that the first of three 25-point basis cuts will begin in June.
