Gold Hits Record High on Sliding Interest Rates and Central Bank Purchases
On Friday, gold reached a record high, with front-month futures on the precious metal rising 1.6% and settling at $2,071 a troy ounce. This marks their highest settlement since August 6, 2020, when they closed at $2,051.50. Gold has seen a significant increase of 13.8% this year.
The surge in gold prices can be attributed to a combination of factors, including sliding interest rates, central bank purchases, and geopolitical tensions. Falling interest rates have boosted speculative demand for gold, as it pays no income and tends to rise when rates fall. The yield on the 10-year treasury note fell more than 10 basis points, to about 4.22%, after Federal Reserve Chair Jerome Powell remarked at an event that inflation is “moving in the right direction.”
Central bank purchases have also played a role in the rally, as central banks around the world have been increasing their gold reserves in response to economic uncertainties. Additionally, ongoing geopolitical tensions, including the war in Ukraine, have contributed to the surge in gold prices as investors turn to the safe-haven asset during times of uncertainty.
The record high for gold comes amid a volatile market environment, with investors closely monitoring economic indicators and geopolitical developments. As the precious metal continues to outperform other traditional assets, it remains a key focus for investors seeking stability and security in their portfolios.