Gold Price Exceeds Recent Gains Supported by Market Expectations for Interest Rate Cuts

SadaNews - The price of gold maintained its recent gains, surpassing the $3700 per ounce mark for the first time ever, supported by market expectations for interest rate cuts in the Federal Reserve meeting on Wednesday.

The precious metal traded near $3694 per ounce on Wednesday morning, only about $10 less than the record peak it reached on Tuesday at $3703.07. The recent rise was also driven by the drop of the U.S. dollar index to levels not seen since March 2022, making gold cheaper for holders of other currencies.

Investors are focusing on the results of the Federal Reserve's Open Market Committee meeting, as traders see a quarter-point interest rate cut as almost certain. Even the strong U.S. retail sales data released on Tuesday did not significantly change these bets. It is well-known that lower interest rates support gold since it is a non-yielding asset.

Gold has risen by more than 40% since the beginning of the year, supported by a range of factors including geopolitical uncertainty, concerns about potential negative effects of U.S. tariffs on the global economy, as well as increased purchases by central banks - particularly from emerging markets.

Expectations for continued upward momentum in the market are growing, with "Goldman Sachs" predicting that prices could rise to nearly $5000 per ounce, if even a small fraction (1%) of private bond holdings shifts to gold.

Meanwhile, the allure of the metal has been bolstered by rising pressures from President Donald Trump on the Federal Reserve. The legal dispute with Governor Lisa Cook, along with the appointment of his economic advisor Stephen Moore to the board, has raised concerns about the independence of U.S. monetary policy and pushed investors to seek safe havens.

Gold recorded slight gains of 0.1% to $3694.24 per ounce by 8:20 AM Singapore time. The Bloomberg dollar index fell after declining 0.5% yesterday. Silver remained below its highest level in 14 years, while palladium rose and platinum remained largely unchanged.