High gold price reflects credit crisis of US dollar

International gold prices have hit record highs recently, with London's spot gold price surpassing $3,050 per ounce on Thursday. The traditional analysis framework has realigned, with gold's value inversely linked to US dollar and US bond yields.

Changes in market dynamics impact gold pricing. Gold serves as a currency, commodity, and financial asset, offering risk mitigation and inflation protection. Factors influencing gold's monetary attributes include exchange rate trends, credit risks, and foreign reserve changes. Commodity attributes are affected by retail consumption, industrial demand, mining activities, and recovery rates. Financial attributes are influenced by the US Federal Reserve's monetary policy.

The Federal Reserve opted to maintain the federal funds interest rate target range at 4.25 percent to 4.5 percent during its March meeting and signaled a gradual slowdown starting in April. This decision, coupled with the Fed's cautious approach led to a modest increase in gold prices, and a weakening US dollar. These movements align with the expectation of ongoing interest rate cuts by the Federal Reserve throughout the year.