HONG KONG: Gold prices surged to a historic high on Monday, surpassing $2,100, fueled by growing trader confidence in the Federal Reserve’s inclination to reduce interest rates in the coming year.
In early Asian trading, the precious metal reached $2,135.39, breaking the previous record established in 2020 during the pandemic.
The anticipation of a decline in interest rates has put downward pressure on the dollar, consequently making gold more affordable for international buyers. This shift in market dynamics prompted traders to turn towards gold as a favorable investment.
The momentum behind the surge gained traction after Federal Reserve Chairman Jerome Powell stated on Friday that interest rates are “well into restrictive territory,” igniting expectations that the central bank might initiate rate cuts soon.
According to Bloomberg, traders estimate a 60 percent likelihood of such a rate reduction in March, with a full pricing of the same anticipated in May. The collective sentiment among traders aligns with the belief that a shift in monetary policy is imminent, contributing to the upward trajectory of gold prices. —APP
