Gold hits new record above $2,200 on rate cut hopes

Gold has hit a new record above $2,200 on Thursday, March 21, 2024 as traders welcomed a Federal Reserve signal that would cut interest rates three times this year.

Equity markets in New York and across Asia increased, and the dollar retreated in reaction to the US central bank’s prediction that it may start easing monetary policy this year, in spite of the recent data showing inflation ticking up in January and February.

Gold traders also joined the party to promote the precious metal to as high as $2,220 per ounce — building on a rally that has seen it rise almost 12% since mid-February.

The gains have been aided by a weaker dollar and the gold’s attraction as a safe haven as geopolitical tensions rise.

Because bullion does not generate any interest, it benefits when central banks lower borrowing costs as its safe-haven status makes it more attractive to investors.

The Pepperstone Group's Chris Weston said: “What we saw last night was the green light really for gold traders to come back in.

“The Fed (has) said that right now they’re tolerant of the inflation that we’ve seen, they’re tolerant that the labour market strength is not going to be the impediment.”

BEB