New York, USA.– Gold futures prices hit a new record on Tuesday as rising expectations of a September interest rate cut boosted demand for bullion, CNBC reported.
Spot gold rose 1.4 percent to $2,454.77. Gold futures advanced 1.3 percent to $2,461.10, an intraday record that surpassed the previous high of $2,454.20 hit on May 20.
Gold prices hit record highs earlier this year before retreating as the prospect of higher interest rates for longer dampened investor enthusiasm for the precious metal.
But interest in the asset has grown after weaker inflation data in June and some recently dovish comments from Federal Reserve Chairman Jerome Powell combined to raise the odds of rate cuts this year.
Markets are pricing in three quarter-point rate cuts this year, with the first expected in September, according to the CME FedWatch tool, which uses 30-day federal funds futures to find probabilities.
The weaker dollar has also supported demand for bullion. On Tuesday, the US dollar recovered after falling to a five-week low.
“‘Buy the dip’ interest continued to prevail among investors amid strong sentiment towards gold, which is likely why the market rebounded quickly on weak US data and dovish Federal Reserve expectations,” UBS strategist Joni Teves said in a note.
“With the market sitting just above the psychological $2,400 level, we believe risks are skewed to the upside,” Teves continued. “We believe positioning remains thin and there is room for investors to build exposure to gold.”
Gold rose to record highs in the first half of 2024 thanks to a multi-year surge in demand from central banks around the world, as rising global geopolitical risks boosted interest in the safe-haven asset. According to UBS, central bank bullion purchases are the highest since the late 1960s.
On the other hand, gold has also been pressured by lackluster Chinese demand. In a recent note, Citi said China’s retail and central bank consumption is expected to remain weak through the summer, but highlighted an “underlying strength” in demand amid a slow recovery in China’s property market.
#Gold #hits #record
