Gold soars to all-time high on rate cut bets

Gold prices hit a record high on Monday due to expectations of a US Federal Reserve interest rate cut, Reuters reported. This comes as data indicates a slowdown in US inflation, prompting a shift in investor sentiment.

Spot gold climbed 0.9 per cent to $2,436.76 per ounce, briefly touching an all-time high of $2,440.49 earlier in the day. US gold futures mirrored this trend, rising one per cent to $2,440.60.

Analysts attribute the gold price surge to a weakening US dollar, making gold more attractive for buyers holding other currencies. Traders now see a 65 per cent chance of a Fed rate cut by September due to cooling inflation, a shift that boosts gold’s appeal as interest rates are expected to decrease.

This week’s focus will be on the minutes from the Fed’s latest policy meeting and upcoming speeches from Fed officials. Investors will be closely analysing these for clues about the future trajectory of monetary policy.

The record high for gold seems to be partially driven by positive sentiment in Chinese metal markets, commented Matt Simpson, senior analyst at City Index.

China, the world’s largest consumer of gold and industrial metals, recently announced significant measures to stabilise its struggling property sector. This news likely provided additional tailwinds for the gold market; Simpson added. It pledged on Friday $42.25 billion to state-owned enterprises for buying unsold apartments, potentially helping developers complete pre-sold projects.

Gold could face resistance at $2,447 per ounce, according to Reuters technical analyst Wang Tao. A break above this level could lead to a potential increase to $2,455.

Beyond gold, silver also enjoyed a stellar day, climbing 2.5 per cent to $32.28, reaching a new 11-year peak.

Meanwhile, platinum gained 0.7 per cent to $1,088.75, nearing its highest point since May 2023. Palladium, however, bucked the trend, dipping 0.5 per cent to $1,013.56.