Quick overview

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Gold held steady near its record high on Wednesday as investors evaluated Federal Reserve Chair Jerome Powell’s cautious remarks about possible interest rate cuts and anticipated US inflation data later in the week.

 

The pressure was also increased by mild profit-taking. Spot gold remained steady at $3,765.29 an ounce as of 0403 GMT.

The price of gold reached a record high of $3,790.82 on Tuesday. Gold futures for December delivery dropped 0.5 percent to $3,798.50. Powell stated on Tuesday that the central bank must continue balancing the risks of high inflation and a weakening labor market in future rate decisions, despite disagreements among his colleagues on both sides of the policy divide. Current gold prices are influenced by Powell’s balanced speech, which included no clear signals of imminent rate hikes, along with overbought technical indicators that encourage profit-taking. A slight decline in gold prices might occur today, but a bullish outlook still prevails.

While central banks worldwide are accumulating gold reserves at a rate not seen in nearly 50 years, the United States’ gold reserves have fallen to their lowest level in 90 years. As a result, gold holdings outside the US have reached a 49-year high, highlighting this divergence.

US policymakers will need to reconsider their stance. This widening gap marks an important shift in global finance. At one time, the US owned more than half of the world’s gold reserves.

The trend is not limited to gold hoarding; gold now accounts for a larger share of foreign central banks’ international reserves than US Treasury bonds for the first time since 1996.

Even though gold prices have hit new all-time highs, a key survey of institutional investors shows that a speculative frenzy has not yet developed, suggesting the rally may have more room to run..