'Bidulgi' Fed also drives gold price up... Surpasses $2200 mark

The U.S. Federal Reserve (Fed) maintained its forecast for three interest rate cuts this year, causing gold prices to surge.

As of the morning of the 21st (local time), April delivery gold futures on the New York Commodity Exchange (COMEX) were trading above $2,205 per ounce, up more than 2% from the previous session. Spot gold prices even reached $2,220 per ounce during the trading session on the day before the March Federal Open Market Committee (FOMC) meeting.

[Image source=Yonhap News]

Gold, a representative safe-haven asset, has been on the rise recently due to expectations of interest rate cuts by the Fed and other central banks worldwide, geopolitical risks, and purchases by central banks mainly in China. Among these factors, the March FOMC meeting, which concluded yesterday, revealed a more dovish (favoring monetary easing) signal than expected, acting as a catalyst for the price increase. In the new dot plot released by the Fed yesterday, the year-end interest rate forecast was maintained, and the number of expected cuts (three times) was not lowered.

Chris Weston, Head of Research at Pepperstone Group, analyzed, "What we saw yesterday was a green light indicating that gold investors may return." Tai Wong, a metals trader based in New York, assessed, "Gold is ready to hit an all-time high as Fed risks disappear." Typically, expectations of a weaker dollar due to interest rate cuts positively affect gold prices. According to Bloomberg, investors expanded their net long positions in gold last week by the largest margin since 2019.

Additionally, geopolitical risks that have recently driven up gold prices, such as Russia's invasion of Ukraine and the war between Israel and the Palestinian armed group Hamas, have not easily dissipated. Purchases by central banks including China, and concerns that market uncertainty will increase ahead of the U.S. presidential election in November, also support gold prices. A representative from the World Gold Council conveyed that "central banks around the world continue to buy gold this year."

Wall Street expects this trend to continue for the time being, sustaining the upward momentum in gold prices. Firms such as Macquarie and Citi forecast that gold prices could surpass $2,300 per ounce this year, reaching an all-time high.

This content was produced with the assistance of AI translation services.