The Gold Rush: Unveiling the Reasons Behind the Ongoing Boom

The Continuous Rise of Gold Prices

The gold price boom continues, and this morning the precious metal has shown a positive momentum, reaching new record highs of $2,450.

Although slightly lower now in the European session, gold bars keep shining.
The growing optimism about the start of a monetary policy easing by the Federal Reserve this year and news from the Middle East have further fueled the metal.

Market Outlook

In general, gold and copper have started the week near historic highs, supported by investors’ optimism about slowing inflation, economic growth, and China’s efforts to tackle the real estate crisis.
Silver has also made its mark.

The surge in gold prices towards new records unveils interesting perspectives on geopolitical risks and Fed policy.

The bullion jumped 1.4% touching $2,450.07 per ounce in Asia, surpassing the previous intraday high reached in April.
In the last sessions, traders have increased bets that the Fed could cut borrowing costs as early as September, a scenario that would strengthen gold, which does not pay interest.

Recent Developments

Last week, the US dollar weakened, and Treasury bonds rallied after data released on Wednesday showed that inflation in April fell more than expected.
This provided support to the precious metal, which is priced in greenbacks.

Moreover, the metal’s safe-haven status came back into the spotlight after a helicopter carrying Iranian President Ebrahim Raisi crashed on Sunday in thick fog.
This news added a risk factor to the geopolitical stability in the region, following a Houthi missile strike on a tanker heading to China in the Red Sea on Saturday.

Market Trends

According to the Commodity Futures Trading Commission data, hedge funds trading Comex futures increased their bullish bets on gold to a three-week high in the week ended May 14.

It’s worth noting that gold’s strength has been linked so far to central banks’ purchases and strong demand from Asia, particularly China.