Gold Reaches New Record High Amid Hopes for U.S. Interest-Rate Cut and Geopolitical Tensions
Gold prices surged to a new record high as rising hopes for a U.S. interest-rate cut and ongoing geopolitical tensions bolstered the precious metal's appeal as a safe haven. This rapid recovery comes after a market crash and selloff in early August.
Continuous gold futures on the New York Mercantile Exchange rose 1.6% to $2,533.4 a troy ounce in European afternoon trading, reaching as high as $2,538.7 earlier in the session. This surpassed the previous all-time futures record of $2,522.5 an ounce set on August 2. Meanwhile, spot gold broke above the $2,500 barrier for the first time.
FxPro senior market analyst Alex Kuptsikevich noted that gold has repeatedly reached all-time highs since March, driven by a global market recovery, safe-haven demand, and growing hopes for an interest-rate cut. Despite falling during the early August selloff, gold outpaced the wider rally, Kuptsikevich added.
Saxo Bank’s head of commodity strategy, Ole Hansen, stated that early August's market turmoil—when gold futures sank as low as $2,403.8—now feels like a distant memory. Better-than-expected U.S. economic data has eased concerns of a severe downturn in the world’s largest economy.
Alex Ebkarian, chief operating officer of precious metals dealer Allegiance Gold, mentioned that the latest U.S. data strengthens the case for a modest 25 basis point interest-rate cut by the Federal Reserve next month. Despite the early August profit-taking, investors will likely continue to seek gold as a safe-haven asset due to persistent geopolitical tensions and market volatility.
Paul Wong, market strategist at Sprott, observed that buying has firmed up from sources beyond financial funds. The U.S. dollar and yields have broken significant support levels, and market deleveraging has ended, halting any further gold selling.
ING analysts noted that the war in Ukraine, ongoing conflict in the Middle East, and tensions between the U.S. and China suggest that safe-haven demand will continue to support gold prices in the short to medium term. The U.S. presidential election should also add to gold’s upward momentum through the end of the year, with strong central bank demand offering further support.
Wong added that continued central bank and sovereign buying, along with Chinese demand, are likely close to exhausting the free-floating inventory of tradable gold.
Saxo Bank maintains a positive outlook on gold as a hedge against market turmoil, with continued demand from central banks, investor concerns about elevated government debt levels, and expectations of a rate cut, Hansen said.
