Gold price have hit a new record high after the Federal Reserve lowered interest rates by 50 basis points. When interest rates drop, Gold often becomes more attractive to investors, as it’s seen as a safe asset during uncertain times. This recent rise in Gold is linked to fears of more economic challenges ahead.
Gold Price Breaks Records
Gold recently surged past $2,600 per troy ounce, setting a new record. This came after the Federal Open Market Committee (FOMC) announced a 50-basis-point rate cut. Lower rates can push investors toward Gold, as it offers stability when other investments, like bonds, become less appealing.
Federal Reserve Chairman Jerome Powell noted that these kinds of rate cuts are rare and shouldn’t be expected regularly. Despite this, many investors aren’t convinced, leading to higher Gold prices. Their confidence in Gold is linked to the belief that more rate cuts might happen soon.
More Rate Cuts Expected
Market experts predict that interest rates could be cut by an additional 75 basis points before the end of the year. This means there might be another 50-basis-point cut, either in November or December. Currently, the chances of this happening in December are slightly higher, but November is still a possibility.
If rates are cut further, it’s likely that Gold prices will continue to rise. Lower rates make it less profitable to hold investments that earn interest, pushing more people to invest in Gold.
How Long Will Gold Keep Rising?
Although Gold prices are climbing, some experts believe the rise won’t last forever. Carsten Fritsch, an analyst at Commerzbank, thinks that the Federal Reserve might go for smaller cuts of 25 basis points at its next meetings. If that happens, Gold’s rise may slow down, but prices are not expected to drop much in the near future.
As long as the market expects more rate cuts, Gold prices should continue to grow. However, investors should be aware that the pace of these gains could decrease if the Federal Reserve takes a more cautious approach.
Conclusion
Gold has reached a new high due to the Federal Reserve’s recent interest rate cut, with more cuts potentially on the way. As long as expectations of further cuts remain, Gold could continue to rise. However, the rate of increase might slow if the Federal Reserve reduces rates less aggressively.
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