Gold Prices Surge Amid Fed’s Potential Rate Cut and Geopolitical Tensions
New York, August 1, 2024 – Gold prices experienced a significant rise on Wednesday following comments from US Federal Reserve Chair Jerome Powell, who indicated the possibility of an interest rate cut as early as September if inflation continues to meet targets. This led to a surge in investor interest, driving spot gold up by 1.2% to $2,437.39 per ounce, marking the largest monthly gain since March with an increase of over 4%. US gold futures also rose by 0.9%, reaching $2,473 per ounce.
Powell’s remarks came after the Federal Reserve decided to keep its benchmark interest rate unchanged. He expressed growing confidence among policymakers that inflation is moving closer to the 2% target, boosting investor hopes for a potential rate cut and increasing gold’s appeal as a safe-haven asset.
Geopolitical tensions have also contributed to the rise in gold prices. The assassination of a Hamas leader in Iran and escalating tensions in the Middle East have further supported the gold market. The US dollar saw a slight decrease, and the yield on 10-year US Treasury notes also dropped, benefiting gold prices.
Prathamesh Mallya, DVP-Research, Non-Agri Commodities and Currencies at Angel One Ltd, commented, “Gold is likely poised for gains amid increased geopolitical tensions and potential interest rate cuts hinted by the Federal Reserve.”
Dr. Renisha Chainani, Head Research at Augmont – Gold For All, noted that gold prices have even surpassed $2,500 in international markets as investors seek safety amid escalating tensions between Iran and Israel. “The recent surprise interest rate hike by the Bank of Japan, coupled with the Federal Reserve’s decision to maintain rates, has triggered a huge sell-off in the USD/JPY pair, supporting gold prices,” Chainani added.
Despite the recent peak in gold prices, Chainani mentioned that there might be some profit-taking around the $2,460 (~Rs 69,000) mark before prices continue to rise.
