Gold prices surged on Monday, reaching record highs due to a weakening dollar and expectations that the U.S. Federal Reserve may implement a larger-than-anticipated interest rate cut this week. Spot gold saw a rise of 0.5%, reaching $2,588.29 per ounce, following an earlier all-time high of $2,589.23. U.S. gold futures also edged up by 0.2%, hitting $2,615.80.
With holidays in countries such as China, Japan, and South Korea, trading conditions were thinner than usual. A weakened dollar, down by 0.2%, made gold more affordable for those dealing in other currencies. Tim Waterer, chief market analyst at KCM Trade, noted that the potential for the Federal Reserve to announce a 50 basis point cut has influenced gold and the dollar in opposite ways. Waterer added that favourable conditions could push gold to $2,700 by the year’s end, assuming the dollar continues its downward trend.
This week, market attention is focused on the Federal Reserve’s meeting on September 17-18, where speculation is high about the size of the anticipated rate cut. Additionally, both the Bank of England and the Bank of Japan are set to announce their policy decisions. Current market predictions show a 59% likelihood of a 50-basis point cut on Wednesday, which would mark the first such cut since 2020. Recent data revealed improved U.S. consumer sentiment in September, although concerns over inflation and the upcoming November elections persist.
Gold, which does not yield interest, is often preferred as an investment when interest rates drop or during periods of geopolitical instability. Meanwhile, spot silver rose by 1.2%, reaching $31.02 per ounce, its highest in two months. Platinum also saw a modest increase of 0.4% to $999.38, while palladium climbed 0.7% to $1,075.60.
The shift in global economic conditions continues to push precious metals higher, with further gains expected should central banks move forward with easing monetary policies.
London-listed company KEFI Gold and Copper plc (LON:KEFI) is an exploration and development company focused on gold and copper deposits in the highly prospective Arabian-Nubian Shield. The Company operates in Ethiopia and Saudi Arabia with projects including Tulu Kapi project, Jibal Qutman EL and Hawiah.
