Gold prices have recently hit a new record, reaching $2,570 per troy ounce. This surge is mainly due to expectations that the U.S. Federal Reserve will cut interest rates significantly in the near future. According to Commerzbank’s Commodity Analyst, Carsten Fritsch, these rate cut hopes are pushing gold prices higher.
How Fed Rate Cuts Are Supporting Gold Prices
The main reason behind the rise in gold prices is the growing belief that the Federal Reserve will reduce interest rates soon. While U.S. consumer prices increased slightly in August, making a 50 basis point cut less likely right away, the market is still optimistic about future cuts.
Current market data shows a 45% chance that the Fed will cut rates soon, despite inflation concerns. The market expects the Fed to cut rates by a total of 100 basis points by the end of the year. This could happen through a 50 basis point cut in one of the two remaining meetings after September, with an additional 100 basis points cut expected by mid-2025.
Gold’s Rise in Europe Due to ECB Rate Cuts
Gold prices have also jumped in Europe, with the price exceeding 2,300 EUR per troy ounce. This increase is largely because of the recent interest rate cut by the European Central Bank (ECB). The market is also expecting the ECB to lower rates even more, which has given a boost to gold prices in the Eurozone.
What’s Next for Gold Prices?
The expectation of more rate cuts from both the U.S. Federal Reserve and the ECB is the main reason for the recent gold price surge. Investors are betting on further reductions, and this is likely to keep pushing gold prices higher in the coming months.
Gold’s rise to $2,570 per ounce is directly linked to expectations of aggressive rate cuts from the Fed and ECB. With more rate cuts expected, gold prices are likely to continue rising. For more daily gold market updates, visit Daily Gold Signal and stay informed with the latest gold price updates.
