Gold rises in price on expectations of a slowdown in the Fed’s rate hikes

The U.S. Federal Reserve (Fed) is expected to slow down raising interest rates amid a decline in inflation. Regarding this, gold begins to rise in price, becoming more and more appealing for investors.

Although the market sentiment is quite optimistic, the Fed hasn’t yet indicated its intention to change the current course of monetary policy. The minutes of the central bank’s last meeting held in December 2022 outlines that the bank needs more reasons for this change.

Currently, several countries attempt to increase their gold reserves, thereby stimulating the rise in prices. In addition, the purchase of the precious metal has become more beneficial for countries outside of the U.S. due to the recently observed weakening of the dollar. 

Caroline Bain, chief commodities economist at Capital Economics, confirmed that many central banks have started to buy gold now. Bain also noted that Russia and China are the most active countries, as they intend to decrease their dependence on the U.S. dollar.

Krishan Gopaul, senior markets analyst at the World Gold Council, highlighted that, among other things, gold has a tendency of showing good results even during crises. Therefore, many investors consider this precious metal to be a safe haven in the period of uncertainty. For this reason, the risk of a global recession also raises the attractiveness of gold for investors.