Gold prices surpass $4,300... Buying interest driven by Fed liquidity expansion

Source: BlockMedia Original Title: Gold Surpasses $4300… Driven by Fed Liquidity Expansion Original Link: https://www.blockmedia.co.kr/archives/1018737 International gold prices have rebounded strongly, buoyed by the Federal Reserve(Fed)'s decision to cut interest rates and measures to supply liquidity. On the 11th(local time), December gold futures on the New York Commodity Exchange(COMEX) closed at $4,285.50 per ounce, up $89.10(2.12%) from the previous trading day, marking the second-highest close of the year. This is the largest daily gain since November 12, and the closing price is 1.17% below the all-time high($4,336.40).

Gold futures prices rose to as high as $4,313.0 during the Asian session on the 12th, continuing an upward trend of +$88.3(+2.09%) compared to the previous day. Over the past 14 trading days, 11 days have shown upward momentum, indicating strong buying interest. The year-to-date increase is 63.00%, the strongest annual return since 1979.

This surge is attributed to the Fed’s 25bp(0.25%p) interest rate cut and the announcement of short-term Treasury(T-bill) purchases. Chairman Jerome Powell’s remarks were somewhat interpreted as dovish by the market, leading to increased expectations for additional rate cuts. At the same time, the Fed announced it would purchase $40 billionbillion worth of short-term Treasury bills each month to stabilize the short-term funding market, which eased short-term interest rate pressures and positively impacted gold prices.

The dollar index weakened to the mid-98s, and the U.S. 10-year Treasury yield also declined to the early 4% level. This reduction in opportunity cost for non-interest-bearing assets like gold is considered a factor supporting the rebound in gold prices. Additionally, structural demand factors such as ongoing central bank gold accumulation and geopolitical tensions also underpin the upward trend.

Meanwhile, silver, a key precious metal alongside gold, also showed strength, closing at $62.39 per ounce. During trading, it reached a record high of $63.25. Sujin Kim, a researcher at MUFG, commented, “Both gold and silver are expected to record the highest annual returns since 1979, driven by factors such as increased central bank purchases, rising ETF inflows, and a flight to safety from Treasury and currency assets.”