Gold prices soared to unprecedented heights on Friday, fueled by a confluence of favorable factors. The precious metal pushed through the pivotal $2400 level, with June 2024 futures settling at a record $2419.80, up an impressive $39 or 1.64%. Spot gold followed suit, climbing $41 or 1.78% to an all-time high of $2417.50.
This remarkable rally was primarily driven by traders bidding up gold prices, as the U.S. dollar remained virtually unchanged, ruling out currency fluctuations as a significant factor. The surge in gold prices was further amplified by the SPDR Gold Shares ETF (GLD), which also hit a record high, closing at $223.66, up $3.63 or 1.65% per share.
One of the key catalysts propelling gold's ascent was the recent Consumer Price Index (CPI) report, which showed inflation moderating in April, falling below economists' forecasts. This data fueled market optimism that the Federal Reserve may adopt a more accommodative stance, potentially implementing rate cuts sooner and larger than anticipated. However, the central bank has cautioned that it relies on trends rather than single data points, tempering expectations of an immediate policy shift.
Additionally, China's stimulus measures aimed at stabilizing its crisis-hit property sector have bolstered gold prices. As a major consumer of the precious metal, China's central bank has been actively accumulating gold reserves, surpassing all other countries in recent years. This trend has been mirrored by global banks worldwide, which collectively purchased record amounts of gold in 2022 and 2023 to fortify their reserves.
Gold's resilience is further underscored by its ability to defy traditional correlations, rising on days when the U.S. dollar and Treasury yields have also climbed. According to the World Gold Council, the global average total expenses for gold miners stood at $1,342 per ounce in the last quarter of 2023, highlighting the potential for substantial profits at current price levels.
With multiple bullish factors converging, gold's resurgence appears poised to continue. Traders and investors are witnessing a historic rally, as both spot gold and the GLD ETF closed at record highs on Friday. As the precious metal edges closer to its all-time high in futures trading, the momentum could propel gold to even greater heights in the coming days and weeks.
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