Reasons for the world gold price to break through last night

According to Kitco - World gold prices rose sharply in last night's trading session, as a series of US economic data showed that the economy is showing clear signs of slowing down. This development increases expectations that the US Federal Reserve (Fed) may soon consider easing monetary policy if growth continues to weaken.

One of the factors supporting gold prices is that US Q1 GDP growth data was adjusted down compared to initial estimates. According to the report, US economic growth was weaker than forecast due to investment and consumer spending being adjusted down.

This is a signal that demand in the world's largest economy is under pressure, in the context of inflation and high interest rates continuing to affect businesses as well as consumers.

At the same time, the US housing market also sent out negative signals. New home sales in April fell much more sharply than analysts predicted.

High mortgage interest rates, rising house prices and inflationary pressure keep many potential buyers out of the market. When economic data weakens, gold often benefits from its role as a safe haven asset.

In addition, the core consumer spending index - a measure of inflation closely monitored by the Fed - increased lower than forecast in the most recent month. Although inflation is still higher than the Fed's target, signs of cooling down partly reduce pressure to maintain too harsh monetary policy. Interest rates and interest rate expectations tend to ease are often factors supporting gold, because precious metals do not yield interest rates.

However, gold's upward momentum does not only come from monetary policy expectations. Geopolitical tensions in the Middle East continue to increase concerns about energy supply risks and commodity price pressures. Experts say the Fed is in a difficult position as growth slows down but inflation remains persistent, especially if price pressure stems from supply factors.

Expert Jeffrey Roach - chief economist at LPL Financial - said that although Q1 growth was adjusted down, business spending may still continue to contribute to the economy in the short term. However, supply constraints may cause inflationary pressure to spread to many commodity groups in the coming months.

In the context of the US economy signaling slowdown, the housing market weakening and geopolitical risks not cooling down, gold continues to attract defensive cash flow. These are the main factors explaining why world gold prices had a strong increase last night.