Finance
Gold futures hit a record above $2,460 on hopes the Fed will cut rates soon
An employee handles the YLG Bullion International Co. headquarters on Friday, December 22, 2023. in Bangkok, Thailand, with one kilo of gold bullion.
Chalinee Thirasupa | Bloomberg | Getty Images
Gold rose to a record on Tuesday as rising expectations of a September interest rate cut boosted demand for the precious metal.
Golden future rose 1.7% to $2,471.1, surpassing the previous record high of $2,454.20 set on May 20.
Spot gold rose 1.8% on the session to $2,465.95, which is a record high according to LSEG data going back to 1968 and not adjusted for inflation.
Gold prices hit a record high earlier this year before retreating as the prospect of longer interest rates dampened investor enthusiasm for the precious metal. But interest in these assets has increased after softer June inflation data and some recent dovish comments from Federal Reserve Chairman Jerome Powell raised the likelihood of rate cuts this year. Markets are now pricing in a 100% chance of a rate cut in September, according to futures trading tracked by the CME FedWatch tool.
Gold futures, 5 years
A weakening dollar has also supported demand for the precious metal. On Tuesday, the US dollar recovered after falling to a five-week low.
“Buy-the-dip interest remained prevalent among investors amid strong gold sentiment, which is likely why the market recovered quickly on soft US data and subdued Fed expectations,” he said. UBS strategist Joni Teves in a note. on Friday.
“With the market just above the psychological level of $2,400, we believe risks are tilted to the upside,” Teves continued. “We think positioning remains lean and there is room for investors to build exposure to gold.”
Gold rose to record highs in the first half of 2024 on a multi-year spike in demand from central banks around the world, while rising global geopolitical risks increased interest in the safe haven asset. According to UBS, central banks’ purchases of precious metals are the highest since the late 1960s.
“With some central banks now questioning the safety of holding USD and EUR denominated assets (following the financial and debt crises and more recently the war in Ukraine), many are choosing to fill their reserves with gold instead,” said a note. month from UBS.
Gold mining stocks also rose on Tuesday. The VanEck Gold Miners ETF gained 3%, on pace for a fifth winning day in six. The US-listed shares of Harmony Gold and Golden fields increased by 16% and 6% respectively.
