Gold Continues Record Rally as Dollar Weakens, Exp
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Posted On: 08/27/2024 5:12:44 PM
Gold Continues Record Rally as Dollar Weakens, Expectations of Rate Cuts Increase
This week saw the price of gold extend its run, remaining above $2,500, driven by increasing investor confidence that the Fed will likely reduce rates of interest next month, and a weaker dollar. Specifically, the price of spot gold hit $2,510.32 an ounce, representing a 0.3% increase. This comes after recording a new high of $2,531.60 per ounce. U.S. gold futures also rose 0.4% to hit $2550.60 per ounce.
On the other hand, the dollar index dipped to a seven-month low, which made gold more attractive for holders of other currencies. At the same time, benchmark United States 10-year bond yields also dropped.
Citi Research’s North America head of commodities, Aakash Doshi, stated that the main drivers of the price of gold were financial investment demand, particularly with improved sentiment as many expect the Federal Reserve’s easing cycle to start next month and buying by exchange-traded funds improving.
Doshi forecasts that by mid-2025, the price of this precious metal could hit $3,000 an ounce after hitting $2,600 at the end of this year. SPDR Gold Trust’s holdings also recorded a new high at 859 tons at the start of the week. This is the biggest gold-backed exchange traded fund globally.
The CME FedWatch Tool reveals that markets are pricing in roughly 71.5% likelihood of the Central Bank reducing rates of interest by 25 basis points next month.
Traders are now keeping track of the information announced during this month’s Federal Reserve meeting as well as the keynote speech delivered by Jerome Powell at the Jackson Hole symposium for any hints on rate cuts.
TD Securities’ commodity strategist Daniel Ghali stated that the precious metal’s positioning may be overextended, with expectations of considerable reductions in interest rates by the Federal Reserve potentially leading to a correction. Gold, which often thrives in an environment with low interest rates, has recorded a more than 20% increase this far into the year. Soon, this may be termed as the metal’s best-performing year since 2020.
A market strategist at the World Gold Council, Joseph Cavatoni, notes that the increase in speculative interest, geopolitical uncertainties and significant inflows into exchange-traded funds globally are further driving the precious metal’s bullish trend.
Other metals didn’t perform as well as gold, with the price of palladium dropping to $927 an ounce, which represents a 0.5% drop. Platinum and spot silver also recorded decreases in prices, falling to $949.05 and $29.42 respectively.
As the price of gold continues on its upward trajectory, the profit margins of jewelry makers may get squeezed by the higher cost of inputs. However, this pressure could be minimal for jewelry makers that don’t buy gold on the open market, such as GEMXX Corp. (OTC: GEMZ); rather these companies are involved in its extraction and other processes until the precious metal is used to make jewelry.
NOTE TO INVESTORS: The latest news and updates relating to GEMXX Corp. (OTC: GEMZ) are available in the company’s newsroom at https://ibn.fm/GEMZ
Please see full terms of use and disclaimers on the MiningNewsWire website applicable to all content provided by MNW, wherever published or re-published: https://www.MiningNewsWire.com/Disclaimer
This week saw the price of gold extend its run, remaining above $2,500, driven by increasing investor confidence that the Fed will likely reduce rates of interest next month, and a weaker dollar. Specifically, the price of spot gold hit $2,510.32 an ounce, representing a 0.3% increase. This comes after recording a new high of $2,531.60 per ounce. U.S. gold futures also rose 0.4% to hit $2550.60 per ounce.
On the other hand, the dollar index dipped to a seven-month low, which made gold more attractive for holders of other currencies. At the same time, benchmark United States 10-year bond yields also dropped.
Citi Research’s North America head of commodities, Aakash Doshi, stated that the main drivers of the price of gold were financial investment demand, particularly with improved sentiment as many expect the Federal Reserve’s easing cycle to start next month and buying by exchange-traded funds improving.
Doshi forecasts that by mid-2025, the price of this precious metal could hit $3,000 an ounce after hitting $2,600 at the end of this year. SPDR Gold Trust’s holdings also recorded a new high at 859 tons at the start of the week. This is the biggest gold-backed exchange traded fund globally.
The CME FedWatch Tool reveals that markets are pricing in roughly 71.5% likelihood of the Central Bank reducing rates of interest by 25 basis points next month.
Traders are now keeping track of the information announced during this month’s Federal Reserve meeting as well as the keynote speech delivered by Jerome Powell at the Jackson Hole symposium for any hints on rate cuts.
TD Securities’ commodity strategist Daniel Ghali stated that the precious metal’s positioning may be overextended, with expectations of considerable reductions in interest rates by the Federal Reserve potentially leading to a correction. Gold, which often thrives in an environment with low interest rates, has recorded a more than 20% increase this far into the year. Soon, this may be termed as the metal’s best-performing year since 2020.
A market strategist at the World Gold Council, Joseph Cavatoni, notes that the increase in speculative interest, geopolitical uncertainties and significant inflows into exchange-traded funds globally are further driving the precious metal’s bullish trend.
Other metals didn’t perform as well as gold, with the price of palladium dropping to $927 an ounce, which represents a 0.5% drop. Platinum and spot silver also recorded decreases in prices, falling to $949.05 and $29.42 respectively.
As the price of gold continues on its upward trajectory, the profit margins of jewelry makers may get squeezed by the higher cost of inputs. However, this pressure could be minimal for jewelry makers that don’t buy gold on the open market, such as GEMXX Corp. (OTC: GEMZ); rather these companies are involved in its extraction and other processes until the precious metal is used to make jewelry.
NOTE TO INVESTORS: The latest news and updates relating to GEMXX Corp. (OTC: GEMZ) are available in the company’s newsroom at https://ibn.fm/GEMZ
Please see full terms of use and disclaimers on the MiningNewsWire website applicable to all content provided by MNW, wherever published or re-published: https://www.MiningNewsWire.com/Disclaimer
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