Gold prices are expected to climb once again amid factors that contradict the typical decline in demand for safe-haven assets, despite fewer interest rate cuts anticipated by the US Federal Reserve this year.
The report highlighted renewed upward momentum in gold prices driven by a bullish outlook and robust buying, particularly from China. JP Morgan, a US-based investment banking firm, recently predicted that gold prices could reach USD 6,000 by 2029, coinciding with the end of US President Donald Trump’s current tenure.
Despite near-record prices, China’s gold imports surged to their highest volume in nearly a year last month. China’s central bank reportedly eased import restrictions to meet the growing demand, with shipments jumping 73 per cent month-on-month to 127.5 metric tonnes.
In contrast, two senior Federal Reserve officials – New York Fed President John Williams and Vice Chair Philip Jefferson – maintained a “wait-and-see” stance, leading market watchers to conclude a low probability of a rate cut at the Fed’s June meeting.
Also read: New import rules for gold and silver
Higher interest rates typically reduce the appeal of non-yielding assets like gold. Earlier this year, gold surged to a record USD 3,500.05 per ounce on April 22 amid global uncertainties. Although prices declined subsequently, this was largely due to easing trade tensions between the US and China.
Gold has seen considerable support this year, largely fuelled by US President Donald Trump’s trade policies. It remains up over 20 per cent year-to-date, driven by significant inflows into gold-backed Exchange Traded Funds (ETFs) and a surge in speculative demand from China.
Meanwhile, the US dollar registered its fourth consecutive weekly gain last week as traders digested fading risk appetite and awaited further signals from the Federal Reserve. A stronger dollar typically dampens gold’s appeal.
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