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HomeGoldGold Attains Record Highs Amidst Growing Expectations of Rate Cuts
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Gold Attains Record Highs Amidst Growing Expectations of Rate Cuts

In a notable surge, gold achieved unprecedented peaks, extending its record-breaking streak for the week. The upswing was fueled by increasing speculations of U.S. monetary easing, complemented by sustained tailwinds generated by central bank acquisitions and heightened demand for the precious metal as a safe-haven asset.

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As of 02:00 p.m. ET (1900 GMT), spot gold marked a 0.4% increase, reaching $2,156.93 per ounce, with a pinnacle of $2,164.09 reached during Asian trading hours. Simultaneously, U.S. gold futures experienced a 0.2% uptick, settling at $2,165.2.

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Federal Reserve Chairman Jerome Powell indicated that the Fed is nearing the threshold of confidence in achieving the 2% inflation goal, potentially paving the way for interest-rate cuts.

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Traders are now factoring in a 74% probability of a rate cut in June, a significant uptick from the 63% estimate recorded on February 29, as per the CME’s Fedwatch Tool.

The prevailing low-interest rate environment diminishes the opportunity cost of holding non-yielding gold and exerts downward pressure on the dollar, rendering gold more affordable for international buyers.

World Gold Council market strategist Joseph Cavatoni emphasized that the surge in gold prices is driven by widespread expectations of imminent rate cuts.

Cavatoni also highlighted the continued robustness of central banks’ gold purchases.

Market dynamics might see further influence from Friday’s U.S. non-farm payrolls report.

While the surge in gold prices was anticipated to impact consumption during the Indian wedding season, China, a major purchaser, is anticipated to exhibit strong safe-haven demand.

Geopolitical risks stand out as a primary driver for the surge in the precious metal, as noted by James Steel, a precious metals analyst at HSBC.

“We only have a narrow group of assets that investors can really call safe haven, and gold is number one amongst them.”

Gold has experienced an ascent of over $300 since the commencement of the Israel-Hamas conflict.

However, it’s noteworthy that the recent rally in gold coincides with a broader upswing in riskier assets.

In the broader market, silver saw a 0.6% increase, reaching $24.31, while platinum climbed 1.3% to $919.00 per ounce.

Palladium experienced a marginal 0.5% decline, settling at $1,037.00 after a remarkable 12% surge.

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