Gold bulls aren’t slowing down. Overnight, the yellow metal smashed through to a fresh record, with spot gold (XAU/USD) trading at $2,585.47 by 08:00 GMT. Traders are doubling down on bets that the Federal Reserve will swing for the fences with a bigger-than-expected rate cut later this week.
A softer dollar is fueling the rally as all eyes turn to Wednesday’s Fed decision. The central bank is poised to cut interest rates, but the real suspense lies in the size of the cut. Markets are on a knife’s edge, split 50/50 between a 25 and 50 basis point cut, according to CME FedWatch. Bets for a larger cut are creeping back into play as concerns grow over cracks in the labor market.
This week could also mark the start of an extended easing cycle, with some analysts forecasting a hefty 100 basis points of cuts before year’s end.
Lower rates typically light a fire under precious metals, reducing the opportunity cost of holding non-yielding assets like gold. If the Fed does go big, gold’s record run may be far from over.
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