The gold market witnessed a historic surge on Thursday as prices soared to unprecedented levels, driven chiefly by the weakening US dollar. As the dollar depreciates, gold becomes more affordable for traders dealing in other currencies, consequently boosting its demand.
The price of gold surged to over $2,792 per 31.1 grams, surpassing the previous peak of around $2,790 reached in late October. This upward trend followed the release of disappointing economic data from the United States, which indicated a slowdown in economic growth during the fourth quarter.
The tepid growth figures could potentially prompt the US Federal Reserve to consider further interest rate cuts to stimulate economic activity. Although the Federal Reserve opted to maintain interest rates steady on Wednesday, following three reductions last year, Chairman Jerome Powell indicated a cautious approach towards any immediate rate cuts. Nevertheless, the cooling economy has led to speculation that the Federal Reserve might opt for a rate reduction sooner than anticipated.
Gold has experienced a significant rally, appreciating nearly 30 percent last year. This surge is partly attributed to its perception as a secure investment during uncertain times, highlighted by tensions in the Middle East. Additionally, central banks in countries like China and India have been substantial purchasers of gold, further supporting its price escalation.