Gold gains over 1% during Thursday’s session

Gold rose more than 1% on Thursday after the U.S. Federal Reserve initiated a monetary easing cycle by cutting interest rates by half a percentage point.

This boost pushed gold to near record highs, just cents away from the $2,600 mark reached in the previous session.

Spot gold gained 1.1%, reaching $2,586.99 per ounce, after hitting an all-time high of $2,599.92 on Wednesday. U.S. gold futures rose 0.5%, closing at $2,612.50.

The U.S. central bank began a series of rate cuts with a larger-than-usual reduction of half a percentage point, citing “increased confidence” in managing inflation.

In addition, Federal Reserve policymakers projected that the benchmark interest rate would fall by another half a percentage point by the end of this year, bringing rates down to 4.50%, with a full percentage point reduction next year and another half-point cut in 2026.

The market expects further and deeper rate cuts due to the U.S. fiscal and trade deficits, which are likely to weaken the global value of the dollar. When combined with geopolitical risks, the current deficit, a low-yield environment, and a weaker dollar, these factors collectively drive gold higher.

The easing of monetary policy by central banks worldwide, alongside strong central bank purchases and geopolitical concerns, has fueled a rally in gold prices, pushing them to record highs multiple times this year.