---
title: "Expectations of a Fed rate cut have declined, so why has gold still hit a new high?"
type: "News"
locale: "zh-HK"
url: "https://longbridge.com/zh-HK/news/109246779.md"
description: "UBS analyst Joni Teves believes that central bank gold purchases and physical demand have provided effective support for the gold price, while short covering in the futures market has also helped support the gold price; the frenzy of US bond expansion has also led to a hot trend in \"credit devaluation\" trading of the US dollar, driving gold prices higher."
datetime: "2024-03-05T10:23:17.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/109246779.md)
  - [en](https://longbridge.com/en/news/109246779.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/109246779.md)
---

> 支持的語言: [简体中文](https://longbridge.com/zh-CN/news/109246779.md) | [English](https://longbridge.com/en/news/109246779.md)


# Expectations of a Fed rate cut have declined, so why has gold still hit a new high?

Gold has been on a continuous rise recently, setting a new record high in closing.

However, the subtle thing is that the market's expectations for the Fed rate cut have been repriced, with the anticipated rate cut now significantly narrowed, about half of what it was at the beginning of the year, leading to a stronger dollar. Gold, which should have softened on the other end of the seesaw, is actually doing the opposite.

Analyst Joni Teves from UBS Group AG believes that **central bank gold purchases and physical demand have effectively supported the gold price, while short covering in the futures market has also helped support the gold price.** According to Bank of America analyst Michael Hartnett, **the rapid expansion of U.S. debt is nearing a frenzy, and the rise in gold prices represents a hot trend in "credit devaluation" trades in the U.S. dollar.**

## Central Bank Gold Purchases and Physical Demand Support Gold Prices

Since gold is priced in U.S. dollars, gold and the trend of the dollar usually have a seesaw relationship.

This year, due to the strong performance of the U.S. economy and signs of a slowdown in inflation, market expectations for rate cuts have been continuously converging. Currently, interest rate swap contracts show that the Fed's rate cut this year will not exceed 75 basis points, half of the expected 150 basis points cut at the beginning of the year. The Invesco DB US DLR Index TR Bullish Fund has rebounded by over 2% this year, but the gold price has not fallen accordingly, instead continuing to rise (despite net outflows from gold ETFs).

UBS Group AG analyst Joni Teves pointed out that central bank gold purchases are a key pillar supporting the gold price, and the gold buying frenzy in 2023 is highly likely to continue into 2024. The World Gold Council's report released in January predicts that central bank gold purchases this year will exceed 500 tons. The large-scale buying by central banks has offset the selling pressure from gold ETFs.

He also believes that macro factors should have put more pressure on gold, but the demand for physical gold in China and India has also supported the gold price.

The analyst wrote:

> **Physical demand in China after the Chinese New Year holiday was better than expected.** Despite the typical seasonal patterns, demand indicators show strong potential interest. Onshore gold premiums remain high, and spot trading volume on the Shanghai Gold Exchange remains above the average level of the past 12 months.
> 
> **Physical demand in India is also strong. Indian consumers seem to have adapted to higher gold prices, and optimistic economic prospects suggest a good sign for gold purchases this year.**
> 
> UBS Group AG expects that India will still be one of the fastest-growing major economies in 2024. Our economists recently raised the real GDP growth forecast for the Indian fiscal year 25 from the previous 6.2% to 7%, with fourth-quarter GDP growth in India outperforming expectations, leading indicators showing economic activity is resilient.
> 
> A potential positive factor for gold consumption is that **this year's monsoon season in India may return to normal, benefiting crop production and boosting income and consumption in rural India, the largest region for gold purchases.** Teves believes that the short covering in gold futures may have also helped support the gold price, although the overall decrease in open contracts indicates limited participation in the gold futures market. However, the current geopolitical risks make investors inevitably more cautious when establishing short positions, making going long on gold a safer choice.

UBS Group AG stated that consumer sentiment towards gold remains generally positive, expecting future gold prices to fluctuate but still have resilience. However, with the increasing upward risk after breaking through key resistance levels.

As of the time of writing, spot gold is priced at $2123 per ounce.

## Credit Devaluation Trading is Hot

Bank of America analyst Michael Hartnett believes that the rapid expansion of U.S. debt has led to "credit devaluation" trading nearing historical highs, which has also been a major reason for the significant surge in asset prices such as gold and bitcoin.

According to data from the U.S. Department of the Treasury, since reaching $32 trillion in June 2023, U.S. debt has surpassed $33 trillion just 3 months later, and on January 4th this year, it broke through the $34 trillion mark. On average, the U.S. debt size increases by $1 trillion every approximately 100 days.

For comparison, it took about 8 months for U.S. debt to increase from $31 trillion to $32 trillion.

Hartnett stated that at the current rate of debt growth, U.S. debt will soon reach $35 trillion; U.S. debt will increase by $18 trillion over the next decade, reaching $52 trillion by 2023, with an average daily increase of $5.2 billion:

> With debt rapidly expanding, "credit devaluation" trading is nearing historical highs, which is also a major reason for the significant surge in assets such as gold and bitcoin.

### 相關股票

- [SPDR GOLD TRT (02840.HK)](https://longbridge.com/zh-HK/quote/02840.HK.md)

## 相關資訊與研究

- [LIVE MARKETS-Gold selloff creates "reasonable" entry point - Barclays](https://longbridge.com/zh-HK/news/280609679.md)
- [PRECIOUS-Gold up more than 1% as uncertainty over Middle East war persists](https://longbridge.com/zh-HK/news/280480473.md)
- [Xpeng Mar deliveries rebound sequentially despite year-on-year decline](https://longbridge.com/zh-HK/news/281331957.md)
- [Several Baidu Apollo Go Robotaxis Freeze In China, Raising Concerns About AV Safety: Report](https://longbridge.com/zh-HK/news/281345987.md)
- [Nio to launch 2026 ES6, EC6, ET5, and ET5 Touring on Apr 2](https://longbridge.com/zh-HK/news/281291925.md)