Gold makes record-breaking rally and later swift retreat

Gold soared by over 3% in Asian markets following remarks by Federal Reserve Chair Jerome Powell on possible rate cuts

By
Web Desk
A customer can be seen looking at gold bangles. — AFP/File
A customer can be seen looking at gold bangles. — AFP/File

It was a record-breaking day for gold prices on Monday, with the precious metal surging to a record high of $2,135.39 per ounce, smashing previous records set in August of last year.

It soared by over 3% in Asian markets following remarks by Federal Reserve Chair Jerome Powell on possible rate cuts. Due to Powell's comments, the US dollar and Treasury yields dropped substantially, making gold a more attractive investment.

However, the euphoria surrounding gold's monumental climb was short-lived. The spike abruptly stopped at lunchtime in New York, sending gold prices plunging 2.2% to $2,023.67 an ounce. The US dollar unexpectedly strengthened on Monday morning, rising by 0.5%, making gold more expensive for holders of other currencies and causing a quick sell-off.

Investors are currently watching the job sector closely for any signs of the Federal Reserve's upcoming monetary policies. Numerous causes, such as rising government and central bank purchases, geopolitical unpredictability, and inflation worries, have supported gold's recent gain and added to its appeal as a dependable investment.

Although gold prices have had a stunning rally, economists warn that the surge may have been overly high. The sudden reversal that occurred on Monday made some wonder if these quick gains might last. Analysts attribute the strong movement to stop-loss orders and speculate that there may be a short-term pullback. But there's still a chance for more gains since others who entered the market later might look for ways to get in, which might lead to more rises in the gold market.