Gold prices made history on Monday, September 29, surpassing the significant milestone of $3,800 per ounce for the first time ever. This surge was driven by a combination of factors including a weakening dollar and growing expectations of further interest rate cuts by the Federal Reserve. Spot gold saw a sharp increase of 1.1% to $3,801.88 per ounce, while U.S. gold futures for December delivery also rose by 0.6% to $3,831.90.
The decline in the U.S. dollar index by 0.2% against its rivals played a role in making gold more affordable for overseas buyers, as it reduced the cost of greenback-priced bullion. Additionally, the U.S. Commerce Department reported that the Personal Consumption Expenditures Price Index (PCE) rose by 0.3% in August, aligning with economists' expectations.
Analysts are optimistic about the future of gold prices, with Kyle Rodda from Capital.com highlighting that the benign inflation data in the U.S. is paving the way for potential rate cuts by the Fed in October and December. Traders are currently pricing in a 90% probability of a rate cut in October and a 65% chance of another easing in December, according to the CME FedWatch Tool.
Gold, known as a safe-haven asset, tends to thrive in a low interest rate environment and during times of economic and geopolitical uncertainty. This sentiment was reflected in the rise of gold prices as well as other precious metals such as silver, platinum, and palladium.
Investors are closely monitoring U.S. economic data, including job openings, private payrolls, ISM manufacturing PMI, and non-farm payrolls, for further insights into the health of the economy. The SPDR Gold Trust, the largest gold-backed exchange-traded fund globally, reported a 0.89% increase in holdings on Friday.
Overall, the gold market is currently in a bullish phase, with expectations of retesting another record high in the near future. Investors will continue to keep a close watch on developments that could impact the precious metals market, as they navigate through economic uncertainties and potential policy changes.
