Gold prices experienced a surge on Tuesday, reaching new record highs. This upward trend was fueled by a weakening dollar as market participants, increasingly confident in the Federal Reserve’s actions, anticipated interest rate reductions in September.
At 08:15 Eastern Time (12:15 GMT), spot gold demonstrated a 0.9% increase, trading at $2,526.43 per ounce, while gold futures climbed by 0.9%, reaching $2,564.95 per ounce.
The market attributed gold’s record-breaking highs to expectations that the Federal Reserve would initiate interest rate cuts in September.
Lower interest rates are generally favourable for gold. This is because they decrease the opportunity cost of investing in assets that do not provide a yield, making gold, a non-yielding asset, relatively more attractive to investors.
Analysts at ING anticipate that gold prices will remain near their record highs due to the growing belief that the US Federal Reserve is nearing an interest rate cut. The focus will primarily be on the scope and timing of the Fed’s potential rate cut, with the Jackson Hole symposium expected to provide further insight into the Fed’s strategy, keeping investors informed and prepared.
Other precious metals also experienced gains, with platinum futures rising by 0.6% to $968.65 per ounce and silver futures witnessing a 1.8% increase, trading at $29.823 per ounce.
