On the first day of April, the price of gold continued to rise.

On Monday, spot gold broke through 2240 and 2,250 in a row during the day, reaching a record high of 2,260 US dollars.

As of press release, spot gold rose 1.34% to $2262.18 an ounce; US gold futures rose more than 2% to $2283.45.

Driven by expectations of interest rate cuts from the Federal Reserve and the attractiveness of gold as a safe-haven asset, the rise in gold prices is becoming more and more intense. As one of the major commodities that performed well this year, gold grew by more than 8% in the first quarter.

On Friday, the key inflation indicators for February, which are regarded as the “barometer” of the Federal Reserve, were released.

The PCE price index rose 0.3% in February; after excluding food and energy price fluctuations, the core PCE price index rose 0.3% month-on-month.

The core PCE rate climbed 2.8% year over year, the lowest level since April 2021, in line with market expectations, but still higher than the Federal Reserve's 2% target.

This may keep the Federal Reserve on hold until it starts considering cutting interest rates.

However, iG market strategist Yeap Jun Rong said that no unexpected rise in the core PCE price index may have provided further impetus for gold prices to break new records.

He said that the core data is currently at its lowest level in nearly two years, which may provide some basis for the Federal Reserve to start the interest rate cut process as soon as possible.

Although Powell reiterated last week that the Federal Reserve is in no hurry to cut interest rates, he also said that the latest US inflation data “is in line with what we want to see,” which indicates that interest rate cuts in June are already under consideration.

Powell said that now the Federal Reserve is facing a double whammy. On one side are economists and investors who are eager to cut interest rates for the first time, and on the other, those who are more cautious. Both sides are evenly matched.

“We will be careful with this decision because we are capable of doing it. We want to be more confident before taking steps to cut interest rates.”

At the interest rate meeting in March, the Federal Reserve kept the interest rate target range unchanged at 5.25% - 5.5%. However, the bitmap still insists on estimating that interest rates will be cut 3 times within 2024, with interest rate cuts of 75 bp.

Currently, the Federal Reserve is awaiting more evidence that inflation is under control.

This week, the non-farm payrolls data will be released on Friday, and the market expects employment data to continue the strong momentum of the past few months — the number of new non-farm payrolls is expected to increase by 200,000 in March.

The market, on the other hand, continues to bet that the first rate cut will occur in June.

According to the CME Federal Reserve's observation tool, the market expects the Fed to stand still again in May. The probability that the Fed will cut interest rates in June is 65.9%. Market pricing is consistent with the FOMC forecast of three interest rate cuts.

In addition to the Federal Reserve's interest rate cut bets, geopolitical conflicts in the Middle East also continue to increase the appeal of gold as a safe-haven asset.

According to CCTV news, on the evening of March 31 local time, Israeli Prime Minister Binyamin Netanyahu said at a press conference that the Israeli army is ready to attack Rafah.

He said that no one can stop Israel from attacking Rafah, and Israel will not delay the attack due to factors such as Ramadan and US pressure.

Seen from this perspective, it seems that the end of the conflict between Palestine and Israel is still “far away.”

At the same time, it is also an important reason for the sharp rise in gold prices, driven by central banks' purchases.

According to data from the World Gold Council, China was the main driver of consumer demand and central bank gold purchases last year, and it is unlikely to slow down.

Among them, the Central Bank of China purchased 224.88 tons of gold in 2023, making it the world's largest net consumer of gold; the Bank of Poland ranked second with the purchase of 130 tons of gold bars, and Singapore ranked third with a purchase of 76.51 tons.

At the same time, China also has the highest retail gold purchases.

According to the data, in 2023, China surpassed India to become the world's largest buyer of gold and jewellery. Chinese consumers bought 603 tons of gold jewellery last year, up 10% from 2022.

Regarding the next trend, Aakash Doshi, head of commodity research at Citi North America, said that the price may rise to 2,300 US dollars/ounce in the second half of 2024, especially in the context of expectations that the Federal Reserve may cut interest rates in the second half of 2024.

According to an analysis by Fangzheng Securities, through the exclusion method of “three gold bears, two bear markets,” gold prices have no basis for a rapid decline in the short term, and they are optimistic that the price of gold will continue to break through record highs during the Fed's interest rate cut cycle.

At the same time, similar to the night before the 2018-2019 gold bull market, it is expected that the price of gold will continue to be disturbed by multi-dimensional macroeconomic indicators. It is expected that the disturbance point will be the best point for allocating gold products/equity, and the price of gold will maintain a volatile upward trend.