Analysts have been calling for new record high prices for gold throughout 2024 and just a few weeks into the year, their projections have been proven to be right on the money. The bulls are rampaging this week and yesterday (Thursday) set a second new all-time high for the week, with prices soaring to £1,693 ($2,172).
If you regularly read our Mid-Week Bulletin, you’ll already know that the first new record came on Tuesday, with prices surging to £1,685 ($2,141). That record lasted all of 48 hours, with the bulls showing they were nowhere near finished for this run.
The latest price high comes on the back of comments made by Federal Reserve chairman, Jerome Powell. He has been in Washington DC this week for his twice annual testimony to Congress. Speaking to the House committee on Wednesday, Powell indicated that inflation had notably receded, paving the way for rate cuts to commence later this year.
Both the U.S. dollar index and Treasury Yields fell in response to his remarks, while the precious metal raced to gains. Powell said that inflation, “Has eased notably over the past year” while also noting that, “If the economy evolves broadly as expected, it will likely be appropriate to begin dialling back policy restraint at some point this year.”
He also outlined that risks remain, with too hasty a move to cut rates likely to “result in a reversal of progress” against inflation. At the same time, the chairman acknowledged that taking action “too late or too little” could set the economy and jobs market on the path to recession.
With an election looming, inflation and rate cuts are becoming a hot political issue for both sides. Democrats are now publicly calling for cuts. House committee member Rep. Ayanna Pressley of Massachusetts who listened to Powell’s testimony said, “We need the Fed to start cutting, because like the rent, interest rates are too damn high.”
Chairman Powell’s testimony has been interpreted as leaning heavily towards rate cuts with this dovish stance strongly favouring higher gold prices.
With the dollar index, Treasury yields and crude oil prices all falling in the wake of Powell’s testimony, the path is clear for the gold bulls to gain even more ground. Could we see a third new price high set in a matter of days? With prices clearly ascending, you’ll need to act fast to secure a lower rate. Buy now.
