Gold prices surged to a two-week high on Thursday after U.S. Federal Reserve Chair Jerome Powell hinted at the possibility of cutting interest rates as early as September.
As of 0419 GMT, spot gold remained steady at $2,444.88 per ounce, following an earlier rise to its highest level since July 18. The prices are now just $39 short of the record high of $2,483.60, which was reached on July 17. Meanwhile, U.S. gold futures climbed by 0.7% to $2,489.10.
“The outlook for gold remains bullish, and prices are expected to reach $2,500 this year as the Fed moves towards lowering interest rates,” commented Peter Fung, head of dealing at Wing Fung Precious Metals.
Powell stated on Wednesday that rate cuts could occur as soon as September, provided the U.S. economy continues on its anticipated trajectory, signaling that the central bank may be nearing the end of its more than two-year fight against inflation.
Gold, which does not yield interest, typically benefits from a low-interest-rate environment.
However, Matt Simpson, senior analyst at City Index, advised caution if gold surpasses $2,500, noting that the metal has struggled to maintain gains at these levels. Market attention is now shifting to Friday’s U.S. payrolls report.
“If the report shows stronger-than-expected data, it could put pressure on gold as the weekend approaches,” Simpson added.
In other news, the assassination of Hamas leader Ismail Haniyeh in Tehran early Wednesday morning has escalated tensions, raising concerns about the conflict in Gaza expanding into a broader Middle East war.
Nicky Shiels, head of metals strategy at MKS PAMP SA, noted that geopolitical factors are becoming increasingly supportive of gold in the medium and long term.
Elsewhere in the precious metals market, spot silver fell by 0.4% to $28.92, platinum decreased by 0.4% to $973.85, and palladium edged down 0.1% to $923.95.
Additionally, a private sector survey revealed that China’s manufacturing activity contracted in July for the first time in nine months.
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