The record-breaking rally for gold resumed last night, as the latest meeting of the Federal Reserve saw gold leap above $2,200 per ounce for the first time.
After spending much of last week in a fairly tight trading range, last night saw the next spark gold had been looking for. As expected, the Federal Reserve kept rates unchanged, but their forward guidance showed they still expect to make three cuts to US rates this year. The news saw the dollar drop almost 1%, and gold pushed on to new all-time highs.
Following a new record close of $2,186/£1,710, gold saw a significant spike as trading resumed, briefly pushing gold to a new all-time high of $2,223.12/£1,739.62. Gold has since settled in around the $2,200/£1,725 level.
Demand remains high for the metal; central banks have continued to buy gold in record amounts so far this year as numerous countries seek to protect themselves from a dollar that is appearing less and less appealing. Investment demand is also picking up, as investors who had waited to see if gold would pull pack from recent highs decide instead to buy in before it rises higher.
Silver also saw some significant gains, rising to $26.31/£20.15 at its highest. The gold-silver ratio remains at 86 currently, and silver has far more upside potential given it is still far from it's all-time high. Investors have been increasingly looking at silver in recent weeks, as a good buying opportunity, and the alternative metal could climb higher quickly as the momentum builds.
If the Fed do go ahead with three rate cuts this year, then the summer will be the likely starting point, and with further uncertainty expected towards the end of the year the latter half of 2024 should have even more potential for gold than at present.
The Bank of England will also announce their latest rate decision this lunchtime and are also expected to hold rates at their current level. If the BoE also point towards cuts in the summer, then sterling could also see some further weakness against the dollar. The UK General Election, also expected to happen in the second half of 2024, could also provide further currency volatility.
Events in Gaza, Ukraine, and a rematch of Biden vs Trump will continue to drive uncertainty in 2024, and further gold's appeal. In times of uncertainty, investors flock to gold as a safe store of value, driving up its price. This dynamic is crucial to understanding gold's recent performance and its potential trajectory. As we navigate through these unpredictable times, the allure of gold only intensifies.
