Gold futures rose sharply. February 2025 gold rose $34.9, or 1.30%, to $2,717.8 an ounce. This was a breakthrough after a long period of accumulation, marking a notable change in the trading trend of this precious metal.
According to Kitco, the current price rally is supported by many attractive factors, starting with geopolitical uncertainties in the Middle East.
Market sources said safe-haven demand has increased following dramatic developments in the region, including news of the collapse of the long-time regime in Syria. Interestingly, the rally has come despite a stronger US dollar, which typically puts downward pressure on commodities.
In addition, central bank activity has emerged as another important driver of gold’s rally. The People’s Bank of China has been particularly notable for signaling a return to buying gold reserves after pausing at record highs. The bank’s purchases reflect growing confidence in gold as a strategic asset.
The US Federal Reserve’s (FED) monetary policy strategy also plays a key role in the current gold market dynamics. FED Chairman Jerome Powell has outlined a cautious approach to interest rate normalization, forecasting a gradual decline from the current over 5% to around 3% - 3.5% in the coming years.
Recent rate cuts, including 50 basis points and then 25 basis points, have laid the groundwork for further easing.
Markets are now focused heavily on the upcoming Federal Open Market Committee (FOMC) meeting. The CME Fed Watch tool shows an 86.1% probability of a 25 basis point rate cut. Following recent comments from Jerome Powell, the Fed is in no rush to cut rates, but will closely monitor economic indicators and inflation trends.
While Powell’s stance on maintaining high borrowing costs typically puts a damper on gold, the market’s subdued reaction suggests those considerations have already been priced in. The precious metal continues to receive support from a complex mix of geopolitical tensions, central bank strategy and monetary policy expectations.
See more news related to gold prices HERE...
