On Thursday, gold reached a new high above $2,200 as investors cheered the Federal Reserve’s announcement that interest rates would be lowered three times this year.
The US central bank’s prediction that it would start loosening monetary policy this year sent equity markets in New York and throughout Asia into a tailspin, and the currency fell despite recent statistics indicating that inflation increased in January and February.
Along with the celebration, gold dealers helped drive the price of the precious metal up to $2,220 an ounce, continuing a surge that has seen it rise nearly 12 percent since mid-February.
The gains have been helped by a weaker dollar and the gold’s attraction as a safe haven as geopolitical tensions rise.
Because bullion does not generate any interest, it benefits when central banks lower borrowing costs as its safe-haven status makes it more attractive to investors.
“What we saw last night was the green light really for gold traders to come back in,” said Pepperstone Group’s Chris Weston.
“The Fed (has) said that right now they’re tolerant of the inflation that we’ve seen, they’re tolerant that the labour market strength is not going to be the impediment.”
