Gold prices hit another record high on Thursday. At the end of the US session, spot gold rose more than $10 in the short term, reaching a record high of 2,236 US dollars/ounce. Futures trading volume surged, continuing weeks of gains driven by bets on the Fed's interest rate cuts and heightened geopolitical tension. It rose about 9% in March, the best monthly performance since July 2020.

Although the expected shift in the Federal Reserve's policy is beneficial to gold, the price of gold has fluctuated greatly over the past month, and there are no clear news triggers to prove that this increase is reasonable. It is worth noting that when gold soared overnight to a new all-time high, the two-year US Treasury yield rose by five basis points to 4.62%, and the US dollar index continued to rise. However, gold ignored these negative factors and also ignored the hawkish remarks made earlier by Federal Reserve Governor Waller.

Daniel Ghali, a commodity strategist at TD Securities, said that traders “adjusted their positions before the Easter holidays and (increased) trading activity at the end of the month and before the end of the quarter,” which boosted the price of gold. Ghali added that if the market starts to expect interest rate cuts to be larger during the Fed's interest rate cut cycle, gold may rise further and may “maintain these high points, but we do see signs of buying exhaustion recently.”

Everett Millman, chief market analyst at Gainesville Coins, said that another reason for the rise in gold prices is that “the global geopolitical situation remains tense,” which may prompt investors to buy gold as a neutral reserve asset.

UBS analysts said, “As adverse factors such as rising interest rates, low stock market volatility, and the strengthening of the US dollar have failed to disrupt the rebound in gold prices, there are still questions about the recent trend in gold prices.”

“Right or wrong, unless inflation continues to rise and the labor market is a major factor in rising inflation, the market's expectations for the Fed to cut interest rates in June may not change,” said Chris Larkin (Chris Larkin) of Morgan Stanley E*Trade.

Major US markets will close on Friday due to Good Friday, but that won't stop investors from focusing on the most important economic events of the week.

PCE data, the key US inflation indicator, will be released on Friday, which will test the rise in gold prices this week. Economists expect PCE to accelerate in February, up 0.4% from January and 2.5% from the same period last year. The rise in gasoline prices is partly responsible, but even when food and energy factors are excluded, the inflation indicator is expected to remain high. Meanwhile, consumer spending is expected to pick up in February, driven by a steady job market and income growth.

It is in this context that Federal Reserve Chairman Powell will answer questions about the US economy and interest rate trends at 11:30 p.m. Beijing time on Friday. Last week, he said the Federal Reserve is ready to act if necessary to support the job market. No one is sure what he'll say, but based on his recent comments and yesterday's comments from Federal Reserve Governor Waller, one thing is clear: the Federal Reserve may cut interest rates sometime this year, but it's just not in a hurry to do so.

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