Gold Soars to Record High Amid Hopes of Rate Cuts and Investor Hedging

Gold reached a new record high due to growing optimism that
the Federal Reserve will begin easing its monetary policy this year,
coupled with escalating geopolitical tensions in the Middle East.

Topic

Gold

Gold as a Safe Haven

Gold

Gold prices jumped 1.1% to $2,440 per ounce in Asian trading upon market opening,
surpassing the previous record set in April.
Traders have recently increased their bets on the possibility that the Federal Reserve will cut borrowing costs at the beginning of September, a scenario that would support the price of gold, which does not yield interest.

Last week, the US dollar fell and Treasury bonds rose after data released on Wednesday showed that the inflation rate in April declined more than expected.
This provided support for the precious metal, which is priced in dollars.

Gold as a Safe Haven

Spotlight was on gold as a safe haven today, Monday, after a helicopter carrying Iranian President Ebrahim Raisi crashed in dense fog yesterday. This news heightened the sense of increasing geopolitical risks in the region, especially after the Houthis launched a missile at an oil tanker heading to China in the Red Sea on Saturday.

The rise in gold prices is driven by this news and the uncertainty surrounding what happened in Iran. Assumptions about the potential impact of these events, which have limited information, might emerge, and investors may hesitate to sell their gold holdings due to low liquidity levels in Asia.

Hedge funds trading futures contracts on the COMEX boosted their bullish bets on gold to the highest level in three weeks during the week ending May 14, according to the latest data from the Commodity Futures Trading Commission.

The spot price of gold rose to $2,450 per ounce during today’s trading. The Bloomberg Dollar Spot Index was steady after falling last week to its lowest levels in over a month. Meanwhile, prices of silver, palladium, and platinum also increased.

Silver traded near its highest levels in 11 years, following a strong rise on Friday supported by positive sentiment in other metal markets. Tightening supplies have spurred investor demand for materials like copper. Unlike gold, the white metal is also considered an industrial commodity due to its use in things like solar panels.

Gold Soars to Record High Amid Hopes of Rate Cuts and Investor Hedging

Gold Soars to Record High Amid Hopes of Rate Cuts and Investor Hedging

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