Gold surged past $2,500 per ounce for the first time, driven by increasing expectations that the US Federal Reserve is nearing a decision to cut interest rates. The precious metal has gained approximately 20% this year, with Friday’s spot bullion prices climbing 1.8%, surpassing last month’s previous record. The rise followed disappointing US housing market data, reinforcing predictions of imminent rate cuts by the Fed.
Gold’s rally has been bolstered by optimism around monetary easing, significant purchases by central banks, and its appeal as a safe-haven asset amid geopolitical tensions, including conflicts in the Middle East and Ukraine. The metal’s ascent earlier this year took many by surprise, with no clear macroeconomic triggers at times. However, the expectation of lower rates has recently pushed prices higher, as market participants anticipate the Fed’s move.
Despite mixed signals from recent US economic data, investors are betting on more aggressive monetary accommodation by the Fed. Bart Melek, global head of commodity strategy at TD Securities, suggests that gold prices could reach $2,700 in the coming quarters as favorable macroeconomic conditions align.
Investor activity shows speculators have increased their bullish bets on Comex gold futures to a four-year high, and gold holdings in exchange-traded funds have risen after years of outflows. The latest US economic data, showing a decline in new-home construction, further fueled speculation of an impending recession, likely prompting deeper rate cuts by the Fed.
At 11:56 a.m. in New York, spot gold was up 1.3% at $2,489.59 per ounce, after briefly touching $2,500.16. Other precious metals like silver and palladium remained steady, while platinum saw a slight decline.
