Gold Hits Historic New High with Rate Cut Expectations

SadaNews Economy: Gold has reached a new record level during trading on Monday, supported by increasing investor expectations regarding the potential for interest rate cuts, ahead of statements from several Federal Reserve officials and key inflation data to be released later this week.

Gold soared to a new record during Monday's trading, buoyed by rising investor expectations about the trajectory of interest rate cuts, ahead of remarks from several Federal Reserve officials and key inflation data to be released later this week.

Price Update

Gold in spot transactions rose to $3,736 per ounce, after it had earlier reached a record of $3,688 this morning.

U.S. gold futures for December delivery gained 1.2% to $3,751.20, according to data from Reuters.

Giovanni Stonevo, an analyst at UBS, stated, "I expect gold to reach new record levels this week as Federal Reserve officials may indicate more monetary easing."

A number of officials from the U.S. central bank are scheduled to speak this week, including its chair Jerome Powell tomorrow, Tuesday, as investors look for further signals regarding the direction of monetary policy.

Markets are also focused on the core personal consumption expenditures index data set to be released on Friday, which is the Federal Reserve's preferred measure of inflation.

The Federal Reserve cut interest rates by 25 basis points last Wednesday, leaving the door open for further monetary easing.

Investors widely expect two more rate cuts this year, each by 25 basis points in October and December, with probabilities of 93% and 81% respectively, according to the CME's FedWatch tool.

Stonevo mentioned, "There is a shift in the factors supporting gold. So far, it has been central banks and Asian demand, and now we are also beginning to see Western investors looking to purchase gold backed by expectations of lower U.S. interest rates."

Gold, which often benefits from lower interest rates, has risen by more than 40% since the beginning of the year, propelled by geopolitical and economic uncertainty, central bank purchases, and monetary easing.

As for other precious metals, silver in spot transactions rose by 1.3% to $43.64 per ounce, the highest level in 14 years. Platinum gained 1.1% to $1,419.65, while palladium increased by 1.1% to $1,161.85.