Gold Prices Hit New High After Fed’s Comments on Inflation
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Gold Prices Hit New High After Fed’s Comments on Inflation

Gold touched a new all-time high on Monday, lifted by Jerome Powell's remarks that current interest rate levels are keeping inflation under control.
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Gold briefly soared to a new all-time high on Monday, surging to nearly $2,150 per ounce before seeing a pullback below $2,070. Various factors drove the surge, most notably the recent Federal Reserve Chair’s comments on inflationary pressures remaining under control. 

Gold on Track for Best Year Since 2020

Gold prices surged above the $2,100 mark on Monday, a new record high, propelled by recent comments by Fed chair Jerome Powell that the current level of interest rates is proving to be efficient in reining in inflation.

The bullion surged to as high as $2,148.9 in early trading hours, though it then gave a significant portion of these gains as it retreated to $2,068, according to TradingView data.

The yellow metal has been on an uptrend for two consecutive months, boosted by the persisting conflict in the Middle East, which has increased the demand for the safe-haven asset. Gold and other precious metals tend to perform better during geopolitical uncertainty due to their status as a reliable store of value. 

Consequently, the bullion rose about 4.15% over the past month and more than 13.4% since the start of 2023. This means that gold is currently on track for its best yearly performance since 2020, when its price surged over 25% amid the coronavirus-induced market carnage. 

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Gold, Bitcoin, and Stocks Surge on Hopes that Fed Tightening Is Over

While many factors have caused the bullion’s overall uptrend, Jerome Powell’s comments on Friday mainly triggered its latest upswing. Notably, the US central bank chairman said that current interest rate levels are doing a good job of keeping inflation under control and pushing it towards the desired 2% target. 

The headline inflation rate eased to 3.2% in October, representing a bigger-than-expected drop. Further, the latest jobless claims report showed the labor market is also cooling, adding to investors’ hopes of a dovish pivot and the likely end of a tightening cycle. 

Such sentiment increased investors’ appetite for riskier assets, boosting Bitcoin above the $42,000 threshold on Monday and elevating the S&P 500 index to a 3-month high

Given the current macroeconomic landscape, do you expect gold to remain on an upward trajectory in 2024? Let us know in the comments below.