As expectations grew that U.S. inflation would not easily slow down, the price of gold futures broke through $2300 per ounce for the first time on March 3rd.
On this day, the closing price of gold futures for June delivery on the New York Mercantile Exchange recorded $2315.0 per ounce, up $33.2 (1.5%) from the previous day. The price of gold surpassed $2300 per ounce for the first time. The price of gold surpassed the $2100 line for the first time on March 4th and broke the $2300 line just a month later.
Experts believe that participants in the gold market are betting on a rebound in inflation or an early interest rate cut by the Federal Reserve (Fed).
Typically, the value of gold rises when inflation expectations increase or interest rates fall. There is also demand for gold as a safe investment asset in preparation for crises.
Amid growing concerns about the resumption of inflation, Federal Reserve Chairman Jerome Powell’s remarks on the day led to a decline in U.S. Treasury yields, boosting the gold price.
Chairman Powell said it was “too early to determine whether recent inflation indicators mean more than a simple bump,” easing a market wary of hawkish (preferring monetary tightening) remarks.
The deepening U.S. fiscal deficit and concerns about the resumption of inflation are fueling the rise in the gold price.
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