The gold prices rise to a record high on Monday as a weaker dollar and prospects of aggressive U.S. monetary policy easing add to the appeal of non-interest-bearing bullion.
Spot gold rises 0.1% to $2,579.09 an ounce, after touching an all-time high of $2,589.59. U.S. gold futures are down 0.1% at $2,606.80.
Dollar index falls 0.4%. Weaker US currency makes dollar-denominated precious metal weaker more attractive to buyers using other currencies.
The first US rate cut is getting closer and more will follow, supporting gold, according to UBS analyst Giovanni Staunovo. “Any changes to the Fed’s dot plot will likely result in short-term volatility, but I think we are still on track for higher prices in the coming months,” he said.
The expectation on the price of the bullion
Gold bullion often becomes a more attractive investment in periods of lower interest rates. and are considered a safe asset in times of turbulence.
Macroeconomic and geopolitical concerns, the US elections and a likely increase in stock market volatility also make up an argument. compelling to increase investment in goldANZ analysts said in a note. “We expect gold prices to move towards $2,700 in the near term and peak at $2,900 by the end of 2025.“, the note added.
Among other precious metals, spot silver gained 0.8% to $30.89 an ounce and hit a two-month high early in the session. Platinum fell 0.3% to $992.10 and palladium rose 0.4% to $1,072.28.
Not only private investors buy gold, but also Central banks have doubled their bet on it and this demand has increased its price. They have been consistent buyers of gold since 2010, a period in which they added more than 7,800 tons to its reservesThis demand has been particularly strong in recent years, especially in 2022, when records were broken, and in 2023.
Thus, although the People’s Bank of China paused its gold purchases earlier this year for the first time in 18 months, the aggregate demand carried out by the central banks in the first half of 2024 was the highest ever recorded for the first semester.
Chris Mahoneyhead of gold and silver investments at Jupiter AM, argues that “the move towards gold shows that central banks recognise that it offers a independent reserve of wealth of any Government or other central bank.”
Analysts are predicting that gold will continue to rise, especially when the Fed lowers the price of money next week. According to Mahoney, “expectations of lower interest rates bring with them a higher gold price, so The impending change in Fed policy is positive for gold”.
Source: Ambito
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