An employee handles one kilogram of gold bullions at the YLG Bullion International Co. headquarters in Bangkok, Thailand, on Friday, Dec. 22, 2023.
Chalinee Thirasupa | Bloomberg | Getty Images
Gold jumped to a record Tuesday as rising expectations of a September interest rate cut bolstered demand for bullion.
Gold futures
settled up 1.6% to an all-time closing high of $2,467.8 per ounce, after also hitting a new intraday record high of $2,474.5 during the session. Gold futures prices have climbed more than 19% this year.
Spot gold
jumped 1.9% to $2,468.68 an ounce during the session. LSEG data shows that’s an all-time high going back to 1968, without adjusting for inflation.
Gold prices hit record highs earlier this year before pulling back as the prospect of higher-for-longer interest rates dampened investor enthusiasm for the precious metal. But interest in the asset has grown after June’s softer inflation data and some recently dovish comments from Federal Reserve Chair Jerome Powell combined to raise the odds of rate cuts coming this year. Markets are pricing in 100% odds of a rate cut in September now, according to futures trading tracked by the CME FedWatch tool.
Gold futures, 5 years
A weakening dollar has also supported demand for bullion. On Tuesday, the U.S. greenback rebounded after falling to a five-week low.
“Interest to ‘buy-the-dip’ remained prevalent among investors amid strong sentiment towards gold, which is likely why the market was quick to rally on soft U.S. data prints and dovish Fed expectations,” UBS strategist Joni Teves said in a note on Friday.
“With the market sitting just above the psychological $2400 level, we think risks are skewed to the upside,” Teves continued. “We think positioning remains lean and there’s space for investors to build gold exposure.”
Gold rallied to record highs in the first half of 2024 on the back of a multiyear spike in demand from central banks around the world, as mounting global geopolitical risks boosted interest in the safe haven asset. According to UBS, central bank buying of bullion is the highest it’s been 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 instead fill their reserves with gold,” read a note last month from UBS.
Gold mining stocks also advanced on Tuesday. The
VanEck Gold Miners ETF
gained 3.4%, posting a fifth winning day in six. The U.S.-listed shares of Harmony Gold and
Gold Fields
rose 16.1% and 6.3%, respectively.
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Conclusion:
With gold hitting record highs and the expectation of interest rate cuts, the precious metal continues to attract investors looking for a safe haven amidst global economic uncertainty. Central bank buying and a weakening dollar have further supported the bullish sentiment surrounding gold. As geopolitical risks mount, gold remains a key asset for diversification and hedging strategies. Stay tuned for more updates on the gold market and other financial news from DeFi Daily News.
