On Thursday (March 23), gold futures closed at their highest level in over a year, boosted by the Federal Reserve’s signal that it is nearing the end of its cycle of raising interest rates.
Gold futures rose by $46.30, or 2.37%, to close at $1,995.90/ounce, the highest closing level since March 10, 2022.
Meanwhile, silver futures rose 47 cents, or 2.06%, to close at $23.256/ounce, platinum futures rose $5.90, or 0.60%, to close at $992.90/ounce, and palladium futures were down $12.90, or 0.9%, at $1,432.80/ounce.
The Federal Reserve Board voted on Wednesday (March 22) to raise interest rates by 0.25%, in line with market expectations, but signaled the end of its cycle of raising interest rates. The Fed officials, in their policy interest rate expectations (Dot Plot), expect the Fed to raise interest rates as high as 5.1% this year, indicating that the Fed will only raise interest rates one more time this year and then cut interest rates by 0.8% in 2024 and 1.2% in 2025.
Goldman Sachs has raised its gold price forecast, hailing gold as the best asset to hedge against financial risks. The firm now expects the price of gold to reach $2,050 an ounce over the next 12 months, up from its previous forecast of $1,950. According to the report, gold price gains have been driven by dollar weakness, China’s opening up, central bank orders, and geopolitical concerns, including inflows into ETFs after Fed interest rates hit record highs.
The latest developments in the Federal Reserve’s policy interest rate expectations and Goldman Sachs’ revised gold price forecast have had a positive impact on the precious metals market, with investors turning to gold as a safe haven asset amidst the uncertainty in the global financial markets.
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Friday, March 24, 2023