Gold Jumps to US$2,200 Per Ounce for the First Time

Gold rose beyond $2,200 per ounce for the first time as the Federal Reserve reaffirmed its forecast for three rate cuts this year, indicating that it is not concerned about recent inflationary pressures.

Bullion surged to a new high in early trading before reducing gains. It has risen since mid-February, boosted by long-standing support such as increased geopolitical concerns and central bank purchases, led by China. However, the quick climb has startled many seasoned market analysts because there has been no evident catalyst.

The rise was fueled in part by expectations for looser monetary policy in the United States, which were reiterated by the Fed on Wednesday. Chair Jerome Powell reiterated that authorities want to see more evidence that prices are falling, but “it’s still likely in most people’s view that we will achieve that confidence and there will be rate cuts,” he added.

“What we saw last night was really the green light for gold traders to come back in,” said Chris Weston, head of research at Pepperstone Group Ltd. “The Fed have 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.”

Speculation about the timing of the Fed’s long-awaited pivot may have triggered recent increases, with statistics suggesting that traders increased their net long positions in gold last week by the biggest since 2019. According to UBS Group AG, the metal could benefit even more if US interest rates fall, as bullion-backed exchange traded funds are likely to expand their holdings.

On the geopolitical front, a variety of dangers bolster gold’s appeal as a haven asset. Russia appears to be gaining ground in its war in Ukraine, the Israel-Hamas conflict is ongoing and has resulted in worldwide shipping rerouting, and the US presidential election at the end of the year might have far-reaching consequences for markets.

Chinese buying has also supported the market. In addition to the central bank, ordinary citizens have been stockpiling coins, gold bars, and jewelry to protect their wealth from a years-long real estate crisis and stock market losses.

Spot gold increased 0.7% to $2,201.94 per ounce as of 9:40 a.m. in Singapore. The Bloomberg Dollar Spot Index fell 0.2 percent. Silver, platinum, and palladium prices were all up.

Thai Government forges ahead with ‘digital wallet’ handout

Meanwhile, the government of Thailand is pushing ahead with a 500-billion-baht (US$13.8-billion) digital currency handout package and may still need to borrow to fund it, a deputy finance minister said on Wednesday.

Julapun Amornvivat’s statements came as parliament began a three-day debate on a 3.48-trillion-baht ($96.5 billion) budget bill for the fiscal year 2024, aimed at revitalizing Southeast Asia’s second-largest economy.

“We insist that it may be necessary to get a loan through a bill, but if there are any changes, we will probably seek approval from the members (of parliament) again,” Mr Julapun told reporters. “But the project will definitely go ahead” .

The proposal would give 10,000 baht to 50 million Thais over six months, but there are doubts about how it will be funded, with some experts calling it fiscally unwise.

He also stated that the government hoped to establish a balanced budget at the appropriate moment.

The 2024 budget for the fiscal year ending September aims for a 9.3% increase in spending and a 0.3% decrease in the budget deficit to 693 billion baht over the previous year.

Following the debate on the budget’s second and third readings, it will require further Senate approval and then royal endorsement.

The administration has stated that the budget will be ready for use by early next month, a delay from the initial start date of October 1, 2023, due to extended political impasse following a general election on May 14, last year. August saw the formation of a new government.

Chinese Create a Gold Rush as Property Prices Crash in China

Chinese Create a Gold Rush as Property Prices Crash in China