Gold reaches all-time high as speculation of rate cuts increases its attractiveness, silver also sees significant increase – Business – Gold and Currency

Gold prices reached a historic high on Monday, driven by a slowdown in U.S. inflation and expectations of an imminent interest rate cut by the Federal Reserve. The price of gold surged 1.4% to $2,448.98 per ounce, hitting a record high of $2,449.89 earlier in the day. U.S. gold futures also rose by 1.5% to $2,453.20.

Traders reacted to recent data indicating a cooling inflation trend in the U.S., with a 65% probability of a rate cut by September. The weakening dollar index made gold more appealing to investors holding other currencies. Kyle Rodda, a financial market analyst at Capital.com, noted that the combination of a soft dollar and expectations of a rate cut has bolstered gold prices.

While gold is traditionally seen as a hedge against inflation, higher interest rates can increase the opportunity cost of holding the precious metal. Investors are closely watching for signals from the Federal Reserve, with the minutes of the last policy meeting scheduled for release on Wednesday, along with comments from Fed officials throughout the week.

City Index senior analyst Matt Simpson highlighted that gold prices hit a record high just before the opening of the Chinese market, possibly influenced by higher metals futures on Chinese exchanges. China, a major consumer of gold and industrial metals, recently announced measures to stabilize its struggling property sector, further impacting the market dynamics.

In addition to gold, silver also saw a significant increase, rising by 1.9% to $32.08 per ounce, reaching an over 11-year high. Analysts at ANZ noted that silver’s relative affordability compared to gold, along with strong market fundamentals, have attracted investor interest. Platinum also experienced gains, climbing 0.2% to $1,083.05, its highest level since May 2023. Meanwhile, palladium dropped slightly to $1,009.05.

The precious metals market is currently experiencing a mix of factors, including inflation concerns, interest rate expectations, and global economic developments. Investors are closely monitoring the Federal Reserve’s actions and statements for clues on future monetary policy decisions. The record-high gold prices and the surge in silver indicate a growing interest in safe-haven assets amid uncertain market conditions.