The price of gold shows moderate growth, holding positions above the psychological mark of $5,000 per ounce. The main driver was weak retail sales data in the US, which strengthened market expectations for further easing of monetary policy by the Federal Reserve. This was reported by Bloomberg, writes UNN.
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The spot price of the precious metal rose by 0.3% to $5,038.66 after recent volatility. In late January, gold reached an all-time high of over $5,595 due to geopolitical instability and doubts about the Fed's independence, but a technical correction subsequently occurred. The metal has now recovered a significant portion of its losses, as investors once again see it as a safe haven amid stagnant consumer spending in the US.
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A decrease in borrowing costs traditionally has a positive effect on gold, as it does not yield interest income and becomes more attractive compared to bonds.
Federal Reserve Chairman nominee Kevin Warsh supports the idea of further rate cuts, which adds confidence to bullion buyers. Along with gold, silver also rose in price, with its price increasing by 0.6% to $81.30 per ounce.
Despite warnings from some Fed officials about a possible pause in rate reviews, major banks maintain optimistic forecasts. Analysts at BNP Paribas SA expect the price to rise to $6,000 by the end of this year.
Similar positive expectations are shared by Goldman Sachs and Deutsche Bank, arguing that fundamental reasons for investors to move away from traditional currency assets remain.
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