Gold futures hit a record high in Asian trading on Wednesday, reaching $2,487.4 per troy ounce as hopes for a U.S. interest rate cut grow, Treasury yields fall, and geopolitical tensions escalate. The August gold futures on the New York Mercantile Exchange were up 0.1% at $2,469.2, surpassing the previous record of $2,477 set in May.
According to analysts, the recent surge in gold prices is driven by falling U.S. Treasury yields and expectations of an interest rate cut by the Federal Reserve in September. The market is currently pricing in a guaranteed rate cut as officials prioritize progress on inflation amidst unexpectedly low inflation figures.
Despite potentially reaching $2,500 per ounce soon, some analysts predict a minor downside correction due to overbought conditions. However, Commonwealth Bank of Australia analyst Vivek Dhar believes there is a positive skew in gold prices, with a possibility of surpassing $2,500 by the end of the year.
While some institutional investors are waiting for the actual rate cut before buying gold, Metals Focus anticipates a further increase in prices post-correction. However, the upside for gold may be limited by the “Trump trade,” which could lead to tighter monetary policy if President Trump secures another term.
Overall, gold’s ability to maintain price support amid market uncertainties is remarkable, with analysts forecasting further price hikes in the coming months. Whether gold hits $2,500 an ounce or exceeds expectations, the precious metal continues to attract investors seeking a safe haven asset in times of economic and political uncertainty.
