The gold price reached a fresh high on Monday, hitting $3,728 an ounce amid growing expectations around a potential Federal Reserve rate cut.
Gold prices climbed to a fresh record high on Monday, building on momentum from last week’s US interest rate cut and signals around further Federal Reserve (Fed) policy easing. The spot gold price reached as high as $3,728 per ounce, extending gains seen since Friday’s rate reduction.
Investors are patiently awaiting a host of key speeches from Fed officials scheduled for this week, including from chair Jerome Powell. Such comments will be closely watched for signs around the future monetary policy direction, as they may offer guidance on the pace and scale of upcoming interest rate cuts.
Markets expect a further two 25-basis-point rate cuts before the end of the year, with one coming in October and another in December. There is a growing confidence that the Fed will continue down the easing path, which could fuel the gold rally even more in 2025. The price of the safe-haven yellow metal has risen 40% since the start of the year.
Meanwhile, traders will be tracking the US core Personal Consumption Expenditures price index, the Federal Reserve’s preferred inflation gauge, due on Friday. Data showing slower inflation could strengthen the case for further rate cuts this year, boosting precious metal prices further.
Why has gold hit a new record high price?
Gold has hit a new record high price largely because investors expect more interest rate cuts from the Fed. This is because lower rates reduce the opportunity cost of holding gold, which does not generate income, making it more appealing during periods of monetary easing.
Another important factor comes from geopolitical uncertainty, particularly the ongoing Russia-Ukraine conflict, which continues to encourage safe-haven flows into the metal. Central banks have also increased their purchases of gold, while exchange-traded fund (ETF) holdings show rising demand from Western investors.
Lastly, ongoing weakness in the US dollar has further lifted bullion, with its recent recovery stalling after hitting multi-year lows. A weaker dollar typically benefits gold, as it makes the precious metal cheaper for holders of other currencies, supporting stronger global demand.
Other precious metals strengthen in value
Aside from gold, several other precious metals have seen their value increase. Silver reached a more than 14-year high, climbing 1.4% to $43.67 per ounce, while platinum gained 0.8% to $1,415. Elsewhere, palladium rose 1.9% to $1,170, reflecting broad support for precious metals across markets.
The gains highlight investor interest in metals with industrial applications as well as safe-haven qualities. Silver and platinum, widely used in manufacturing and automotive industries, benefit from both economic activity and investor appetite for tangible assets.
Options trading activity has also surged, particularly in silver, where bullish bets have risen strongly. This indicates that traders expect further price increases, supported by optimism around potential US interest rate cuts and resilient demand across multiple sectors.
With spot gold holding comfortably above the $3,700 mark, market sentiment remains bullish despite overbought conditions. Over the coming week, investors will be closely watching the comments from Fed policymakers for clues around interest rate reductions going forward.
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