WASHINGTON: Gold topped US$2,500 an ounce for the first time, bolstered by hopes the US Federal Reserve (Fed) is edging closer to cutting interest rates.
Spot bullion climbed as much as 2.2% last Friday, exceeding the previous record set last month, as a disappointing reading on the United States housing market reinforced expectations of fast and deeper cuts by the Fed. Lower rates generally are positive for gold as it pays no interest.
The precious metal is up more than 20% this year amid mounting optimism on monetary easing and large purchases by central banks.
It also has seen increased demand as a haven asset due to rising geopolitical risks, including tensions in the Middle East and Russia’s war with Ukraine.
Bullion began shooting higher earlier in the year – surprising seasoned analysts and veterans as there wasn’t always a clear macro catalyst to justify its price rally.
It sustained those gains even as traders dialled back bets on the timing of rate cuts.
More recently, gold has ticked higher as US officials widely are expected to start lowering rates soon.
A slew of US data on recent activities has convinced markets the United States central bank is on the cusp of lowering borrowing costs from a more than two-decade high, with the metal’s conventional drivers returning to the fore. — Bloomberg
