Gold hits new record amid Fed rate cut expectations
Gold prices soared to a fresh record as investors anticipated a potential Federal Reserve interest rate cut this week.
Market participants are also weighing the likelihood of further monetary easing in the coming months, fueling demand for the safe-haven asset, News.Az reports, citing Bloomberg.
Bullion on Tuesday surpassed Monday’s all-time high of around $3,685 an ounce, where it was also supported by a gauge of the US dollar falling to the lowest in more than seven weeks. While a rate cut this week is priced in by markets, the Fed will also release its quarterly update of economic and rate forecasts, dubbed the dot plot, and Chair Jerome Powell will hold his post-decision press conference.
A string of weak labor data and no major inflation surprises have boosted prospects for further rate cuts this year. That would be positive for gold, which doesn’t pay interest.
Meanwhile, US President Donald Trump’s mounting pressure on the Fed, including his effort to oust Governor Lisa Cook, has reinforced bets on more dovish monetary policy. In addition, the administration’s economic advisor Stephen Miran is on his way to joining the central bank as soon as Tuesday.
Gold has surged more than 40% this year, outpacing major assets such as the S&P 500 index, and recently surpassed its inflation-adjusted peak reached in 1980. Persistent trade and geopolitical uncertainties, along with concerted purchases from central banks and inflows to exchange-traded funds, have added to the momentum. Goldman Sachs Group Inc. has forecast bullion could approach $5,000 an ounce if just 1% of privately-held Treasuries shift to the precious metal.
Gold rose 0.2% to $3,686.39 an ounce as of 9:01 a.m. Singapore time, following its 1% gain on Monday. The Bloomberg Dollar Spot Index was steady. Silver steadied below the highest price in 14 years, reached on Monday. Platinum edged lower, and palladium rose.
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