- Gold prices have hit a record high as hopes for U.S. interest rate cuts grow and some traders intensify their bets on a second term for Donald Trump.
- According to gold trading platforms, the spot price of gold surged to $2469.54 per ounce, surpassing its previous all-time high set in late May.
- This surge comes amid signs of slowing inflation in the United States, fueling speculation that the central bank will soon start lowering interest rates.
- High interest rates tend to negatively impact gold, which bears no interest.
However, the price of the yellow metal is still up about 20 percent this year, supported by large purchases by central banks, strong consumer appetite in China, and demand for safe-haven assets amid geopolitical tensions. Also, the recent surge in exchange-traded fund holdings is helping the upward momentum.
Commenting on the performance and influencing factors, Ewa Manthey, a commodities strategist at ING Bank NV, said earlier on Tuesday: "Optimism about U.S. rate cuts, as more economic data supports the Fed's pivot case, is supporting gold." She added, "Gold is poised to maintain its positive momentum amid the current global geopolitical and macroeconomic landscape, while central bank demand is expected to grow."
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Earlier this week, U.S. Federal Reserve Chairman Jerome Powell said recent data gave policymakers more confidence that inflation is heading toward the central bank’s 2 percent target, and traders are now pricing in two quarter-point rate cuts this year. Concurrently, traders are betting there will be three cuts this year after Goldman Sachs Group Inc. said conditions are ripe for easing, with a “strong rationale” for officials to cut rates as soon as July.
Overall, the recent surge in gold prices is not entirely unexpected. In June, Metals Focus, a consultancy firm, predicted a new record this year, while Citigroup said earlier this month that their baseline scenario for gold in 2025 ranges between $2700 and $3000 per ounce.
Meanwhile, investors across markets are weighing the growing likelihood of Trump returning to the White House, as his candidacy gains momentum after a failed assassination attempt over the weekend and the dropping of a criminal case against him. Giovanni Stanovoy, a commodities analyst at UBS Group AG, said a Trump presidency could have both positive and negative effects on gold. It could lead to “tax cuts, support a shift to equities and ultimately limit faster rate cuts,” he said. However, he said the tax cuts would also weigh on U.S. financial balances, potentially weakening the dollar and driving buyers toward safe-haven assets such as gold.
Gold Price Forecast and Analysis Today:
According to the performance on the daily chart attached, the price of gold is still on a strong and sharp upward path, and its recent gains were enough to push all technical indicators towards strong buying saturation levels, and profit-taking sales may occur if the US dollar recovers. Currently, the closest resistance levels for gold are $2472 and $2500 per ounce, respectively. Technically, the price of gold will continue to interact with the level of the US dollar and the extent of investors' appetite for risk or not, in addition to the future policies of global central banks.
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