Although the Federal Reserve still maintains a tough monetary policy, analysts believe that “a combination of factors” is expected to push the price of gold to even record highs.

On Thursday, Federal Reserve Chairman Powell crushed expectations that the Federal Reserve will start cutting interest rates in March. Adam Koos, president of Libertas Wealth Management Group, said that the latest statement from the Federal Reserve has caused “ripples” in the gold market.

Goldseek.com President Peter Spina said that the FOMC is adopting a more “patient approach to keep interest rates high for a longer period of time,” which mitigates people's hopes that the Fed will cut interest rates sooner rather than later.

He said that the potential strength of the gold market is being driven by central bank purchases.

The World Gold Council said in a report released on Wednesday that central banks maintained an “astonishing rate” of gold purchases, with an annual net purchase volume of 1,037 tons, almost the same as the 2022 record, and only 45 tons less than last year.

Spina said that central banks have been hoarding gold like “treasure hunters”. Despite strong headwinds, such as soaring US bond yields and the US dollar's “ridiculously strong,” their insatiable appetite has helped drive up the price of gold.

Since mid-December last year, gold has remained stable above the important psychological threshold of $2,000. Spina said that the price of gold “stands firmly on the launch pad” and expects the price of gold to rise to a record high in the next few months. He said:

“You can't tell from the overall sentiment indicator that the price of gold is close to a historical high, but this is a 'typical hidden gold bullish trend'.

Spina said that the gold bull market is “quietly occurring” and that the “excitement phase” will arrive a little later as the price of gold steadily enters a record range.

He anticipates that those who have shorted gold will “see their dream gradually fade and... become ammunition for the bears” and that “there will be many triggers for the price of gold to rise.”

Koos listed a “set of factors” that could push gold to a record high later this year, including possible easing by the Federal Reserve, a weakening dollar, and continued safe-haven demand “when global economic uncertainty never seems to go away.”

Expectations that the Federal Reserve will cut interest rates soon pushed the price of gold to a record high at the end of December last year, but analysts also believe that in the context of the war, especially in the Middle East, safe-haven demand for gold has risen.

Spina said, “Geopolitical tension and conflict are spreading, risks are increasing, and many BRICS countries' share of gold reserves is getting higher and higher.”

Furthermore, China's demand for gold remains strong and is expected to increase further as the Lunar New Year approaches.

Adrian Ash, head of research at BullionVault, said that China is the largest gold mining country, importer, and central bank buyer. Furthermore, demand for gold jewelry and investment surges every Lunar New Year. “China's surging demand for gold shows no sign of slowing down.”

Looking ahead, Ash believes that it is actually difficult for gold prices to drop too much this year. Ash said:

“The price of gold was strongly supported above $2,000 due to the central bank's continued demand and the impetus of today's terrible geopolitical tension.”