Gold Hits Record High as Dollar Weakens and Fed Rate Cut Bets Rise

Gold prices surged to an all-time high this week, driven by a weakening US dollar and growing expectations of a potential interest rate cut by the US Federal Reserve. Spot gold reached a peak of USD2,500.99 per ounce, settling at USD2,489.12, a 1.3% increase. US gold futures also saw a notable rise, climbing 1.4% to USD2,527.80. This upward trajectory has seen gold appreciate by 2.4% over the past five days.

The recent rally in gold prices is attributed to a series of favorable macroeconomic data that have prompted Wall Street to speculate on a possible rate cut by the Fed in September. The weakening dollar index, which fell by 0.3% and is poised for a fourth consecutive week of losses, has made gold more appealing to international investors. Additionally, heightened geopolitical tensions in the Middle East have further fueled demand for the precious metal as a safe-haven asset.

In contrast, other metals in the broader market experienced mixed results. Silver fell slightly by 0.2% to USD28.35 per ounce, platinum declined by 1% to USD943.10, and palladium decreased by 0.9% to USD935.43. Despite these declines, all three metals are expected to record weekly gains. In domestic trading, gold futures on the Multi Commodity Exchange (MCX) saw a minor drop of 1.28%, ending at Rs6,404 per 10 grams.

Analysts point to recent volatility and bullish sentiment in the gold market as key factors behind its historic high. Market participants are now closely watching the upcoming Jackson Hole Economic Symposium, where Federal Reserve Chair Jerome Powell will address the economic outlook. Powell’s remarks are anticipated to provide clearer indications on the Fed’s stance regarding future rate cuts, influencing gold prices further.

The record-setting performance of gold underscores its role as a critical hedge against currency fluctuations and economic uncertainties, reflecting investor confidence in its value amid a changing financial landscape.