Gold prices hit an all-time high on Monday in the Asian markets, driven by increasing bets that the U.S. Federal Reserve will soon cut interest rates. Investors are speculating whether the rate cut will be 25 or 50 basis points, with many anticipating a larger reduction due to signs of economic slowdown. This potential rate cut is crucial for gold investors, as lower interest rates generally reduce the opportunity cost of holding non-yielding assets like gold. In Asian trading, spot gold rose by 0.4% to a new record of $2,589.02 per ounce, with gold futures for December seeing a slight increase as well.
The Federal Reserve’s upcoming decision is a major focal point for markets, with traders evenly split on whether the cut will be 25 or 50 basis points. The CME FedWatch tool highlights this indecision, with 50% of the market betting on each scenario. Concerns over a weakening labor market and slower economic growth have intensified these speculations. Additionally, a softer U.S. dollar has further bolstered gold prices, making the metal more attractive to international investors.
Another significant factor supporting gold’s surge is the safe haven demand that followed a second assassination attempt on Donald Trump. The incident took place at his golf course in Florida, where secret service agents thwarted the attack. Trump was unharmed, but the event added to global uncertainty, driving investors toward safe haven assets like gold. With rising geopolitical risks, gold is expected to remain a preferred investment during times of turmoil.
Gold wasn’t the only metal benefiting from global uncertainties. Platinum futures saw a 0.4% increase, reaching $1,004.80 per ounce, while silver futures rose by 0.8% to $31.33 per ounce. These increases, like gold, are largely driven by speculation on lower interest rates and growing concerns over global stability.
Copper prices, on the other hand, showed more stability but less impressive gains. A softer dollar helped push copper prices slightly higher, with benchmark copper futures rising by 0.1%. However, weak economic data from China, the world’s largest copper consumer, tempered these gains. Industrial production, retail sales, and other economic indicators fell below expectations in August, raising fears of a slowdown in copper demand.
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Gold prices hit a record high, fueled by speculations of an upcoming Fed rate cut. Learn about the factors driving the surge in gold prices.
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