Gold soars to historic level after US Fed stuck to its interest rate path

Gold prices rose to an unprecedented level on Thursday amid a decline in the dollar and bond yields after the Federal Reserve (the US central bank) maintained its expectations of three interest rate cuts this year.

According to Reuters, low interest rates reduce the opportunity cost of owning non-yielding bullion and put pressure on the dollar, making gold cheaper for buyers in other currencies.

Gold rose in instant transactions 0.8% to $2,203.84 per ounce by 0153 GMT, after recording the highest level ever at $2,222.39 earlier in the session. US gold futures jumped 2.1% to $2,206.30.

The US Federal Reserve kept interest rates on hold on Wednesday, but policymakers indicated they still expect to cut them by three-quarters of a percentage point by the end of 2024.

Fed Chairman Jerome Powell said that the recent high inflation rate readings did not change the basic scenario of a slow easing of price pressures in the United States.

“With Powell maintaining three potential interest rate cuts this year, bond yields and the US dollar fell, opening an upward path for the price of gold,” Tim Waterer, chief market analyst at KCM Trading, said in a note.

As for other precious metals, silver rose in spot transactions 0.4 percent to $25.70 an ounce, platinum increased 0.8 percent to $914.25, and palladium jumped 1.2 percent to $1,034.