An employee handles one kilogram of gold bars at the YLG Bullion International Co. headquarters in Bangkok, Thailand, Friday, December 22, 2023.
Charlene Thirasupa | Bloomberg | Getty Images
Gold prices jumped to a record high on Tuesday as rising expectations of a September interest rate cut boosted demand for the metal.
gold futures It rose 1.5% to $2,465.30, surpassing the previous high of $2,454.20 hit on May 20.
Gold prices hit record highs earlier this year before retreating as the prospect of higher interest rates for a longer period dampened investor enthusiasm for the precious metal. But interest in the asset grew after weak June inflation data and some recent dovish comments from Federal Reserve Chairman Jerome Powell combined to raise the odds of a rate cut this year. The market is currently pricing in a 100% chance of a rate cut in September, according to futures trading tracked by CME’s FedWatch tool.
Gold futures, 5-year term
A weaker U.S. dollar also supported bullion demand. The dollar rebounded after falling to a five-week low on Tuesday.
UBS strategist Joni Teves said in a report that “amidst strong gold sentiment, investor interest in ‘buying the dip’ remains widespread, which may be the reason why the market is recovering from U.S. The reason for the rapid rise was on weak data and dovish expectations from the Fed.
“With the market just above the psychological level of $2,400, we believe risks are skewed to the upside,” Teves continued. “We believe positioning remains underweight and there is room for investors to build exposure to gold.”
Gold rose to a record high in the first half of 2024 as rising global geopolitical risks boosted interest in safe-haven assets, with demand from central banks around the world surging for years. According to UBS, the amount of gold purchased by central banks has reached its highest level since the late 1960s.
“With some central banks now questioning the safety of holding dollar- and euro-denominated assets (in the wake of the financial and debt crisis and the recent war in Ukraine), many are choosing to fill their reserves with gold,” UBS’s final report reads. One month.
Gold mining stocks also rose on Tuesday. this VanEck Gold Miners ETF It rose 3%, its fifth winning day in six days. Harmony Gold and Harmony Gold’s U.S.-listed shares gold mining area Increases of 14% and 7% respectively.
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