Gold Shining Again: Fed’s Bostic Now Anticipates Just One Rate Cut This Year

Expectations that the U.S. Federal Reserve may begin interest rate cuts as early as June, along with a declining value of USD, drove an increase in gold prices today, on Monday, March 25.

These elements keep increasing the shine of gold in the eye of most investors. Still, the increase in U.S. Pressure from Treasury yields kept gold from rising over certain intraday levels.

Fed Chairman Jerome Powell recently hinted at potential policy easing later this year by speculating that the current policy rate may have peaked. However, he emphasized how unclear the economic picture is and how there is no assurance that the old-fashioned 2% inflation objective would be reached. On top of that, once again, gold has become more affordable for holders of different currencies due to a minor decline in the value of the dollar relative to other currencies. Also, we shouldn’t forget about the ongoing wedding season in India, when gold buying is traditionally on the rise, which will add even more demand to already high level of global central bank purchases detected by several business media earlier this year.

Meanwhile, according to Bloomberg, Federal Reserve Bank of Atlanta President Bostic expressed his opinion that just one interest-rate cut this year would be enough, adding that the rate cut isn’t imminent, but will likely happen later in the year than he previously expected.

Bostic had previously said that it would be appropriate for the Fed to lower rates twice in 2024, with the first of those cuts likely coming this summer.