A one-kilogram gold bar at the headquarters of YLG Bullion International Co. in Bangkok, Thailand, on Friday, Dec. 22, 2023.
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Gold prices continued to set new records on Wednesday, boosted by growing confidence that the Federal Reserve will cut interest rates in September following comments from Fed Chairman Jerome Powell.
Spot gold price up 0.5% to $2,482.29 an ounce, hitting an all-time high according to LSEG data. Gold futures rose to $2,478.4 an ounce.
On Monday, Powell said The Fed will not wait for inflation to reach the central bank’s 2% target before starting to cut, given the lag in policy effects. He said the Fed is looking for “greater confidence” that inflation will return to 2%. Monthly inflation rate fell in June — for the first time in more than four years.
And that has given confidence to market watchers. to CME FedWatch toolmerchant is believe the Fed will cut interest rates in September. When interest rates fall, gold tends to become more attractive compared to fixed income assets like bonds.
“The move was driven by signs of slowing inflation, followed by weak economic data,” said Daniel Hynes, senior commodity strategist at ANZ. wrote in a note.
Gold price has broken new heights in recent months due to its appeal as a safe-haven asset amid escalating tensions in the Middle East, as well as central banks buying bullion.
“Gold’s ability to find support in all conditions this year is remarkable,” said Vivek Dhar, head of energy and mining commodities research at Commonwealth Bank of Australia.
“These dynamics come despite a stronger US dollar, largely due to the market delaying expectations of a Federal Reserve rate cut,” the research analyst said, adding that gold prices could rise above the bank’s forecast of $2,500 an ounce by year-end.
