Gold Prices Reach New Record Level Amid Growing Bets on Interest Rate Cuts

SadaNews - The price of gold has reached a new record level, as investors' bets on a potential interest rate cut from the Federal Reserve this week increase, amid expectations of further monetary easing in the coming months.

Gold surpassed its all-time high on Tuesday, which was recorded on Monday at nearly $3,685 per ounce, also supported by a decline in the index measuring the strength of the US dollar to its lowest level in more than seven weeks. Although markets are already pricing in a cut this week, attention is turning to the Federal Reserve's quarterly update on economic forecasts and interest rates, known as the "dot plot," alongside a press conference by Fed Chair Jerome Powell.

Weak Data and Stable Inflation Strengthen Gold

A series of weak data in the labor market, along with a lack of surprises in inflation figures, have bolstered expectations for another interest rate cut this year, which is seen as a positive development for gold, which does not yield returns.

President Donald Trump continues to exert increasing pressure on the Fed, including his attempt to oust governor Lisa Cook, which has reinforced bets on a more accommodative monetary policy. At the same time, Stephen Miran, the economic advisor in the US administration, is set to join the Federal Reserve, possibly on Tuesday.

Gold Outperforms All Major Assets

Gold has jumped more than 40% since the beginning of the year, outperforming major assets like the S&P 500 index, and has finally broken the inflation-adjusted historical level recorded in 1980.

This rise comes amid ongoing geopolitical and trade uncertainties, strong purchases from central banks, and significant inflows into gold exchange-traded funds.

According to Goldman Sachs, gold could approach $5,000 per ounce if only 1% of individuals' holdings in US Treasury bonds shift to the precious metal. (Read more about the investment bank's forecasts here)

As of 9:01 AM Singapore time, gold rose by 0.2% to $3,686.39 per ounce, after gaining 1% on Monday. The Bloomberg Dollar Spot Index remained stable, while silver remained steady below its 14-year high, platinum dipped slightly, and palladium rose.