Gold futures hit a record high above $2,460 on expectations that the Federal Reserve will soon cut interest rates.
An employee handles a 1 kilogram gold bar at the headquarters of YLG Bullion International Co. in Bangkok, Thailand, Friday, Dec. 22, 2023.
Charlini Tirasuppa | Bloomberg | Getty Images
Gold hit a record high on Tuesday as demand for bullion soared on expectations of a September rate cut.
Gold gift After hitting a new intraday high of $2,474.50 during the session, it rose 1.6% to a record close of $2,467.80 per ounce. Gold futures are up more than 19% this year.
Spot Gold It rose 1.9% during the session to $2,468.68 an ounce, its highest level since 1968 without adjusting for inflation, according to LSEG data.
Gold prices hit record highs earlier this year but have since fallen as the prospect of higher interest rates in the long term dampened investor enthusiasm for the precious metal. However, interest in the asset has picked up as weak inflation data in June and recent dovish comments from Federal Reserve Chair Jerome Powell have combined to increase the likelihood of a rate cut this year. According to futures trading tracked by the CME FedWatch tool, the market is currently pricing in a 100% chance of a rate cut in September.
Gold gift, 5 years
A weaker dollar also supported bullion demand, with the greenback rebounding after falling to a five-week low on Tuesday.
“Amid strong sentiment toward gold, there remains strong interest among investors to ‘buy the dip,’ which is likely why the market has surged on the back of weak U.S. economic data and dovish expectations from the Federal Reserve,” UBS strategist Johnny Tevez wrote in a note Friday.
“We think the risk is skewed to the upside as the market is just above the psychological level of $2,400,” Tevez continued. “We think positioning is still thin and there is room for investors to build gold exposure.”
Gold hit record highs in the first half of 2024, fueled by years of surging demand from central banks around the world. Rising global geopolitical risks have led to increased interest in safe-haven assets. Central bank bullion purchases are at their highest since the late 1960s, according to UBS.
“As some central banks question the safety of holding US 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 instead,” a UBS note last month said.
Gold mining stocks also rose on Tuesday. VanEck Gold Miner ETF It rose 3.4%, marking its fifth straight day of gains in six days. Harmony Gold’s U.S.-listed stock and gold field They rose 16.1% and 6.3% respectively.
