(Bloomberg) - Gold prices rose solidly ahead of a speech by US Federal Reserve Chairman Jerome Powell this week, with bullion topping US $1 million (S $1.31 million) for the first time.
Gold prices continued to advance after hitting a record high on Monday, rising to $2,514.70 per ounce as of 4 p.m. on Tuesday. A gold bar typically weighs about 400 ounces, which means that each bar is worth, today, more than $1 million.
Powell will speak at the Jackson Hole Symposium this coming Friday, and markets will be closely watching his views on the direction of interest rate policy.
In data released last week, the US producer price index (PPI) rose 2.2 per cent year-on-year in July, below expectations of 2.3 per cent. The consumer price index rose 2.9 per cent from a year earlier, also below expectations. Separately, the number of Americans filing new claims for unemployment benefits in the week ended August 10 was the lowest in five weeks. The upbeat economic data has led markets to expect Powell to signal a rate cut in September.
A rate cut in the U.S. would be positive for gold, as lower rates would lower the opportunity cost of holding gold.
Gold prices have risen more than 20% this year on expectations that the Federal Reserve will soon cut interest rates. At the same time, heightened geopolitical risks and uncertainty ahead of the U.S. election in November are also driving demand for gold as a safe haven. These factors have prompted global central banks and Asian investors to rush into gold.
Net gold purchases by central banks reached 483.3 tonnes in the first half of the year, equivalent to nearly 40,000 gold bars, Bloomberg estimates based on Metals Focus, a consultancy.
However, there are other signs that high prices appear to be starting to affect demand for gold in China. Last month, imports by the world's largest gold consumer fell to their lowest level since May 2022.
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