The global gold market witnessed a historic moment on Thursday, March 21st, as gold prices breached the $2,200 per ounce barrier for the very first time. This unprecedented surge is attributed to a combination of factors, including geopolitical tensions and hints of an interest rate cut from the US Federal Reserve.
The upward trend in gold prices began in mid-February and has continued unabated. Central banks worldwide, seeking to bolster their reserves amidst geopolitical uncertainties, have been actively purchasing gold. This sustained demand, coupled with the positive signals from the US Fed, fueled a buying frenzy in the international market. Spot gold prices jumped 0.70% today, reaching a record high of $2,201.94 per ounce.
Last week, international gold traders had already positioned themselves for a price increase, pushing gold to its highest level since 2019. These bullish sentiments were further amplified on Wednesday when Federal Reserve Chair Jerome Powell hinted at a potential interest rate cut. A decrease in interest rates typically makes gold a more attractive investment compared to interest-bearing assets.
Market experts like Mayank Mohan point towards the looming threat of a global recession, exacerbated by geopolitical risks. This economic unease has prompted even major economies like China to significantly increase their gold purchases. Additionally, a weakening property market in several European countries has shifted investor confidence towards the stability and security offered by gold.
The relentless demand for gold has propelled prices to record highs. Experts anticipate that if this trend continues in the international market, the Indian bullion market is likely to witness a similar price surge.
