Gold sets new record high as rate cuts loom

Gold prices hit record highs for the 7th day as Fed hints at rate cuts and economic data weakens.

Gold sets new record high as rate cuts loom
Gold News

Gold surged to record highs on Thursday, extending its winning streak to seven days, as weak economic data and the prospect of interest rate cuts from the Federal Reserve fuelled investor demand.

Spot gold (XAU/USD) reached a new peak of $2,162.30 per ounce before settling slightly lower at $2,156.19 as of 07:10 GMT.

The recent surge has been fuelled by several factors, including dovish signals from the Fed and recent data suggesting a slowdown in the U.S. economy. Federal Reserve Chair Jerome Powell, who is scheduled to speak later today, hinted at potential rate cuts in the coming months if inflation continues to moderate.

Lower interest rates tend to make gold, which offers no yield, more attractive to investors compared to other interest-bearing assets like bonds.

Powell’s comments, coupled with data released on Wednesday indicating a softening labor market, triggered a sell-off in the U.S. dollar and Treasury yields, further bolstering gold’s appeal.

Market analysts have warned that if upcoming economic data, including Friday’s labor market report and next week’s inflation figures, show further signs of weakness, gold prices could surge past $2,200+ in the short term. However, keep in mind, that analyst predictions are just educated guesses, so don’t bet the farm on them.