Gold Prices Reach Record High as Expectations for Fed Rate Cut Rise

On Thursday, gold spot prices reached $2,554.05 per ounce, rising by 1.7%. The market anticipation of a forthcoming Fed interest rate cut spurred this new record. U.S. gold futures also climbed by 1.5% to settle at $2,580.60.

This rise aligns with recently released U.S. economic data showing a slowdown, which bolsters expectations of reduced interest rates, enhancing gold’s attractiveness as an investment.

The shift towards a potentially lower interest rate environment has markets factoring in a high chance of a 25-basis-point rate cut by the Fed in their next meeting. According to experts, such a financial landscape is beneficial for gold, which is traditionally favored in low-interest rate conditions due to its zero yield.

The labor market’s apparent weakening is also a sign that the Fed might embark on prolonged rate cuts, further supporting gold’s appeal.

Meanwhile, in related markets, palladium rose by 4.1%, and platinum increased by 3%, influenced partly by geopolitical tensions and statements over potential Russian export limits on critical metals. Silver also gained significantly, rising by 3.7% to $29.76 per ounce.