Gold rises to fresh record before data that may offer Fed clues

Gold price surged to a new all-time high as traders processed recent economic data and comments from policymakers, all while awaiting a series of crucial economic reports. These upcoming releases are expected to shed light on the Federal Reserve's potential for further monetary easing, fueling speculation and market anticipation.

Gold climbed as much as 0.5%

Bullion rose as much as 0.5% to a record $2,634.90 an ounce, beating the previous all-time high posted on Friday. Gold has advanced since the Fed lowered its benchmark interest rate by half a percentage point last week, building on what was already a record-setting year for the precious metal.

After assessing remarks from Monday’s Fed speakers, traders are now focused on upcoming US personal consumption data and jobless claims. These reports could influence the Fed's outlook on future rate cuts, which tend to benefit gold, a non-yielding asset.

“The market looks increasingly in need of consolidation, but at this point, a deep one is needed to rattle hedge funds holding the largest bet on higher prices since 2020,” according to a report from Saxo Bank A/S.

Bull market for gold

The gold bull market continues to surge, with COMEX prices reaching a record high, exceeding $2,625 per ounce. Prices spiked rapidly following the Federal Reserve's substantial 50 basis point rate cut, which exceeded the expectations of some economists. Many analysts and institutions had anticipated this move and are forecasting further price increases.

Gold, widely regarded as a hedge against inflation and a neutral asset, reached a new all-time high on Wednesday. This milestone is part of a more than 30% rise in gold prices over the past year, driven by several key factors, including ongoing geopolitical uncertainties and strong demand from central banks.

The gold bull market could push prices to $3,000 by next year. Gold has already surpassed the $2,600 year-end target set by Aakash Doshi, Citigroup’s Head of North American Commodities. Doshi's longer-term forecast suggests that gold could reach $3,000 by mid-2025.

UBS also believes the current gold rally has significant room to run, though its outlook is more conservative. The bank forecasts spot prices to reach $2,700 by mid-2025, driven by strong demand.

Fed cuts and middle east tensions boost gold price

Fed Chair Jerome Powell emphasized that the rate cuts reflect the central bank's commitment to stabilizing inflation and maintaining low unemployment. As the US dollar weakens due to lower interest rates, non-yielding assets like gold become more attractive to investors. Lower rates reduce the opportunity cost of holding gold, further driving its demand.

Geopolitical instability in the Middle East is fueling the upward momentum in gold prices. Escalating tensions, especially between Israel and Hezbollah, have driven increased demand for safe-haven assets. Israeli military actions in Lebanon and Gaza have intensified concerns over a broader conflict. Gold's status as a reliable store of value during crises remains strong, and with a weakened US dollar and rising geopolitical risks, gold has become an increasingly attractive investment.

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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.