Gold Hits New All-Time High on Growing Expectations of Fed Rate Cuts
Traders are still pricing in U.S. rate cuts in October and December, after the Fed lowered rates by 25 basis points earlier this month.
Quick overview
- Gold reached a new all-time high of $3,790.82 per ounce, driven by safe-haven demand amid geopolitical tensions and expectations of Federal Reserve rate cuts.
- Spot gold increased by 0.8% to $3,777.80, while U.S. gold futures for December delivery rose by 1.1% to $3,815.70.
- Fed Chair Jerome Powell acknowledged challenges with inflation and job growth, but his remarks did not significantly impact gold's upward trend.
- Investor demand for gold is expected to remain strong due to anticipated rate cuts and ongoing geopolitical concerns.
Gold surged to a fresh all-time high on Tuesday, lifted by safe-haven inflows amid geopolitical uncertainty and growing expectations of further Federal Reserve rate cuts.
Spot gold rose 0.8% to $3,777.80 per ounce, after touching a record $3,790.82 earlier in the session. U.S. gold futures for December delivery gained 1.1% to $3,815.70.
The yield on the benchmark 10-year U.S. Treasury slipped 0.2%, while the dollar held steady.
Fed Chair Jerome Powell said the central bank faces a “challenging situation” as risks of faster-than-expected inflation persist, while weaker job growth raises concerns about the labor market’s health.
The gold market recognized there was nothing new in his speech compared with last week’s tone—nothing significant enough to alter gold’s bullish trajectory.
Traders are still pricing in U.S. rate cuts in October and December, after the Fed lowered rates by 25 basis points earlier this month.
Focus on U.S. Inflation Data
Attention now turns to Friday’s release of the U.S. personal consumption expenditures (PCE) index, the Fed’s preferred inflation gauge. Meanwhile, NATO warned Russia it would use “all necessary military and non-military tools” to defend itself, condemning Moscow for violating Estonian airspace in what it called an “increasingly reckless pattern of behavior.”
Investor demand through ETFs—driven by expectations of rate cuts, concerns over Fed independence, and geopolitical tensions—is also likely to support gold prices, Commerzbank said in a note.
Among other precious metals, silver rose 0.2% to $44.17 per ounce, hovering near a 14-year high. Platinum jumped 4.5% to $1,480.97, its strongest level since 2014, while palladium climbed 2.8% to $1,212
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