Global gold price rose during Thursday’s trading, reaching levels close to record values. This came amid expectations of another major US interest rate cut this year. However, gains were limited ahead of the statements of key monetary policymakers at the Federal Reserve.
The impact of the US dollar on gold price
The slight recovery in the US dollar has kept gold prices under control. However, markets are still expecting more aggressive cuts from the Federal Reserve before the end of the year, boosting demand for gold. Tim Waterer, senior market analyst at KCM Trade, noted that the situation is tilted in gold’s favor.
Gold’s annual performance
Gold prices have risen by about 29% so far in 2024. Bullion has hit record highs several times, driven by monetary policy easing from major global banks. Geopolitical concerns have also contributed to increased demand for gold, which is considered a safe haven asset amid economic and political turmoil.
Rate cut by the Federal Reserve
Last week, the Federal Reserve cut its key interest rates by 50 basis points. Traders now see a 62% chance of another similar cut in November,
Fed Chair Speech
Later today, Fed Chairman Jerome Powell is scheduled to speak at a conference. New York Fed President John Williams and Vice Chairman Michael Barr will also speak. These statements are important in determining the direction of monetary policy.
Economic Data Ahead
On Thursday, US jobless claims data will be released, while the Fed’s preferred inflation gauge, core personal consumption expenditures, will be released on Friday. These data will influence the Fed’s decisions and market expectations.
Gold Price Range and Settlement Yesterday
Nicholas Vrebel, Head of Global Institutional Markets at ABC Refinery, notes that gold prices are currently hovering in a range of $2,610 to $2,690. The overall trend is bullish, unless consumer spending or employment figures beat expectations.
Other Influencing Factors
Other factors that could affect gold prices should be monitored, such as geopolitical tensions and changes in equity markets. These factors could lead to significant market volatility.
Gold prices remain under the influence of a range of factors, including US monetary policy and economic concerns. Markets are closely monitoring economic announcements and new data, as they can significantly impact prices. With expectations of a rate cut, demand for gold appears to remain high, boosting its value as a safe-haven asset.
Gold at settlement yesterday: Gains consolidated amid geopolitical tensions
Gold prices consolidated their gains during Wednesday’s trading, amid ongoing geopolitical tensions in the Middle East. This increase also coincided with monetary stimulus measures taken by China, which boosted demand for the yellow metal.
Gold at settlement
At settlement, gold futures for December delivery rose 0.3%, or $7.7, to $2,684.7 per ounce. This is the fifth record high for gold since the Federal Reserve cut interest rates.
Chinese monetary stimulus measures
The People’s Bank of China cut the interest rate on the one-year lending facility by 30 basis points, to 2%. This is the largest cut since the mechanism was introduced to guide monetary policy in 2016. The decision reflects the Chinese government’s efforts to boost economic growth amid current challenges.
Spot gold price
Meanwhile, spot gold rose 0.2% to $2,660.75 per ounce. The yellow metal hit a record high of $2,670.43 on Wednesday. Gold futures, on the other hand, settled at $2,684.00.
Dollar performance, geopolitical tensions and their impact on gold price
On the other hand, the dollar index contracts fell by 0.08%, reaching 100.54 points. This decline in the value of the dollar enhances the attractiveness of gold as an investment.
Other Metals
Other metals prices also rose, as silver in spot transactions increased by 0.3% to reach $31.931 per ounce. While platinum rose by 1.4%, reaching $1001.71, and palladium increased by 1.7% to reach $1055.66. Gold prices continue to rise amid multiple factors, including geopolitical tensions and expansionary monetary policies. Gold remains well positioned to extend its gains, as economic concerns continue and demand for safe assets increases.
Geopolitical Tensions and Their Impact on gold price
Geopolitical tensions in the Middle East are a major factor pushing investors towards gold. Wars and conflicts cast a shadow over the markets, leading to increased demand for safe assets. When crises flare up, many turn to gold as a means of preserving value.
Monetary Stimulus and Its Impact on Markets
The stimulus measures taken by major countries such as China play an important role in steering global markets. Lowering interest rates means increasing liquidity in the financial system, which boosts investments in gold. This policy reflects China’s desire to boost economic growth, especially in light of the current economic challenges.
The Relationship between Gold and the Dollar
The relationship between gold and the US dollar remains pivotal. When the dollar weakens, gold tends to rise. Therefore, declines in the dollar index are a good opportunity to increase gold investments. At these times, investors prefer gold as a safe haven.
Future Trends for Gold Price
Many expect gold prices to continue to rise in the near term. Fears of economic recession and inflation, in addition to easy monetary policies, reinforce this trend. It is necessary to monitor any changes in fiscal and monetary policies, as they may significantly affect the market.
