Gold prices have surged to a new record high, driven by increased speculation of Federal Reserve rate cuts and ongoing geopolitical tensions. On Tuesday, bullion gained as much as 0.3 per cent to reach a fresh all-time high of more than $US3647 an ounce, surpassing the previous peak set on Monday. The rally follows unexpectedly weak US payrolls data released last Friday, which has led traders to anticipate three rate cuts this year, potentially including a quarter-point cut at the Fed’s upcoming meeting next week. Gold typically benefits from lower borrowing costs, as it does not pay interest itself.
The sustainability of gold’s upward trajectory hinges on upcoming US economic data, including a benchmark revision of jobs data due later today. The tone of US producer and consumer inflation figures scheduled for release on Wednesday and Thursday will also influence market sentiment. Furthermore, market participants will closely monitor the reaction to auctions of short and long-term treasuries.
Gold has already climbed nearly 40 per cent this year, buoyed by central bank purchases, rate-cut speculation, and heightened demand as a safe-haven asset amidst geopolitical uncertainty. Concerns about the impact of President Donald Trump’s tariff policies on the global economy have also contributed to gold’s rise. Additionally, the US leader’s criticism of the Fed’s independence has further extended gold’s three-year rally.
Analysts and investors generally anticipate further gains for gold. Goldman Sachs has suggested that the precious metal could potentially rally to nearly $US5000 an ounce if investors reallocate even a small portion of their holdings from treasuries into bullion, particularly if there are signs of increased political interference with the central bank.
