Hong Kong, China– Gold rallied to a fresh record above $2,200 on Thursday as traders welcomed a Federal Reserve signal that it would cut interest rates three times this year.
Equity markets in New York and across Asia surged and the dollar retreated in reaction to the US central bank’s projection that it would begin easing monetary policy this year despite recent data showing inflation ticking up in January and February.
Gold traders also joined the party to push the precious metal to as high as $2,220 per ounce — building on a rally that has seen it climb almost 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 labor market strength is not going to be the impediment.”