The price of gold (April) rises by 0.7 percent to $3,011.5. The spot price is also approaching the $3,000 level and is currently trading at $2,999.2.
These moderate inflation figures in the US are driving the increase, strengthening hopes that the Fed will ease monetary policy, which the market has already priced in, according to ING.
Expectations of lower interest rates, combined with concerns about higher tariffs and weaker economic growth, have increased the attractiveness of gold as a safe investment, as reported by the Wall Street Journal.
Gold has always been seen as a safe haven in times of economic uncertainty and market volatility. Investors turn to gold as a hedge against inflation and currency devaluation, as well as a store of value in times of crisis.
The recent rise in gold prices can also be attributed to geopolitical tensions, such as the ongoing trade war between the US and China, as well as political uncertainty in Europe and the Middle East. These factors have increased investors’ appetite for safe assets like gold.
In addition to geopolitical factors, the recent dovish stance taken by central banks around the world has also contributed to the rise in gold prices. Central banks in major economies like the US, Europe, and Japan have signaled a willingness to cut interest rates and implement other accommodative measures to support economic growth. This has weakened the value of fiat currencies and boosted the appeal of gold as an alternative store of wealth.
Furthermore, the rise of negative-yielding bonds in several countries has made gold even more attractive to investors seeking returns in a low-interest-rate environment. With government bonds offering negative yields, investors are turning to gold as a way to preserve their wealth and generate potential returns.
Overall, the confluence of factors such as geopolitical tensions, central bank policies, and negative interest rates has created a perfect storm for gold prices to soar. As long as these uncertainties persist, gold is likely to remain a preferred asset for investors seeking safety and stability in an increasingly volatile global economy.