Gold surged to a record high as markets anticipated the Federal Reserve’s initiation of monetary policy easing for the first time in over four years.
Bullion prices increased by as much as 0.4%, reaching $2,589.03 an ounce during Asian trading hours, following a 3.2% gain last week, ahead of the Fed’s meeting on September 17-18, where a rate cut of at least 25 basis points is widely expected.
However, there are differing views on the pace of future rate cuts by the US central bank, with some traders and economists now speculating that a more aggressive half-point reduction could occur this week. Lower borrowing costs are generally considered beneficial for gold, which does not earn interest.
The precious metal also received support from a weaker US dollar, which dropped following an apparent assassination attempt on former President Donald Trump.
Gold has risen over 25% this year and reached its previous high on Friday, bolstered by the Fed’s indications of a shift toward monetary easing. Central bank purchases and heightened demand for safe-haven assets due to ongoing conflicts in the Middle East and Ukraine have contributed to this upward trend. Additionally, interest from retail investors is on the rise.
As of 11:20 AM in Singapore, spot gold was up 0.3% at $2,585.49. The Bloomberg Dollar Spot Index fell by 0.2%, having dropped 0.8% in the previous three sessions. Silver and platinum also saw gains, while palladium remained relatively unchanged.