Due to Expectations of US Interest Rate Cuts... Gold Prices Hit Another All-Time High

Amid expectations of a Federal Reserve (Fed) interest rate cut and continued gold demand from China, international gold prices reached an all-time high on the 1st (local time).

Last month on the 10th, citizens were passing in front of the Korea Gold Exchange in Jongno-gu, Seoul. [Image source=Yonhap News]

According to Bloomberg on the day, international gold prices rose 1.6% from last Thursday's closing price, reaching a record high of $2,265.73 per ounce.

Earlier, the U.S. Department of Commerce announced on February 29th (local time) that the core Personal Consumption Expenditures (PCE) price index, excluding volatile food and energy, increased by 2.8% compared to the same period last year. This is a slight slowdown from the 2.9% year-over-year increase in January.

Jerome Powell of the Federal Reserve (Fed) commented on this indicator, saying, "It is not as low as most of the positive figures from the second half of last year," but added, "However, it is certainly closer to the level we want to see." He also reaffirmed the Fed's stance that a sustained decline in inflation toward the 2% target is necessary before considering a rate cut. Since a lower benchmark interest rate reduces the opportunity cost of investing in gold, the expectation of a rate cut due to the stabilization of the PCE price index is interpreted as being reflected in gold prices.

Bloomberg analyzed that China's continued gold purchases are also driving up gold prices. Additionally, heightened military tensions in the Middle East and Ukraine are pushing up gold prices as a safe-haven asset.

Meanwhile, China's central bank, the People's Bank of China, has significantly increased its gold holdings over the past 16 months to reduce dependence on the U.S. dollar and diversify its foreign exchange reserves.

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