Gold rises to record high on US rate cut, Middle East conflict
Mon Sep 23 2024
Gold prices extended gains to scale a record high on Sept 23, driven by the momentum generated by the US Federal Reserve’s interest rate cut and safe haven demand due to geopolitical risks in the Middle East.
Spot gold rose 0.2 per cent to US$2,628.28 per ounce, as at 0349 GMT, after hitting a record high of US$2,630.93 earlier in the session. Gold is up more than 27 per cent so far in 2024, heading for its biggest annual rise since 2010.
US gold futures gained 0.3 per cent to US$2,653.00.
“The current state of play in the global economy, which consists of declining interest rates, seemingly ever-present geopolitical risks and an upcoming US election, has suited gold to a tee,” said KCM Trade chief market analyst Tim Waterer.
“If the Fed stays committed to its rate-cutting cycle in the coming months, then any pullback in gold will likely have buyers waiting in the wings, with investors potentially eyeing off some better entry points.”
The US Fed began its easing cycle with a half-percentage point rate cut on Sept 18, forecasting another half-point cut by year-end and a full point in 2025.
Fed futures traders have priced in 75 basis points in rate cuts by the end of 2024, according to CME FedWatch.
Lower rates reduce the opportunity cost of holding bullion, which is also viewed as a safe asset amid economic and political turmoil.
Elsewhere, Hezbollah and Israel exchanged heavy fire into Sept 22, with the Lebanese militant group launching rockets deep into northern Israel amid intense bombardment, marking one of the most significant escalations in nearly a year of conflict.
For this week, traders will be looking forward to comments from Fed officials and US PCE inflation data due on Sept 27, for further policy hints.
Spot silver edged 0.1 per cent lower to US$31.07 per ounce, platinum fell 0.8 per cent to US$967.50 and palladium shed nearly 1 per cent to US$1,057.38