Gold prices maintained their upward trajectory, hitting another record high as investors increasingly anticipate Federal Reserve rate cuts amidst economic uncertainties in the United States.
During Asian trading hours, bullion surged to a historic peak of $2,475.81 per ounce, following a substantial 1.9% gain in the previous session. The precious metal has been on a month-long rally fueled by expectations of earlier and more aggressive rate cuts by the Fed, as inflation trends closer to the central bank’s target. Gold, which offers no interest yield, typically benefits from lower borrowing costs.
Year-to-date, gold has surged nearly 20%, bolstered by robust buying from central banks, strong consumer demand in China, and heightened interest in safe-haven assets amid geopolitical tensions.
Market sentiment has been increasingly influenced by momentum traders, who have become pivotal in driving gold prices higher in this bullish environment. Following a brief dip triggered by stronger-than-expected US retail sales, traders swiftly resumed long positions in gold, contributing to a rebound and attracting further investment flows, according to Chris Weston, head of research at Pepperstone Group Ltd.
Weston noted, “The fundamentals have clearly shifted, prompting investors to reconsider their gold holdings, which has fueled momentum-driven gains. With sentiment broadly supportive and positioning not yet extreme, the $2,500 mark could be tested in the near term.”
However, caution persists among some investors who see signs of overextension in the rally. Gold’s 14-day relative strength index approached 70, a level often interpreted as indicating overbought conditions.
Meanwhile, global markets are also assessing the fallout from recent geopolitical events, including the weekend assassination attempt on Donald Trump amid his presidential campaign resurgence. A potential return to the White House by Trump could heighten global trade tensions, potentially enhancing gold’s appeal as a safe-haven asset. Additionally, proposed tax cuts could exacerbate the US government deficit, further impacting market dynamics.
As of 9:11 a.m. in Singapore, spot gold edged up 0.1% to $2,472.29, moderating from an earlier increase of 0.3%. The Bloomberg Dollar Spot Index remained stable, alongside unchanged 10-year Treasury yields. Silver prices saw gains, while platinum and palladium prices held steady.
