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Gold futures surged to another record high settlement on Thursday, driven by geopolitical tensions and anticipation of a Federal Reserve rate cut in September.
Investors are eagerly awaiting the release of the Personal Consumption Expenditures price index on Friday, which is the Fed’s preferred gauge of inflation. This data will offer further insights into the potential magnitude of an upcoming rate cut.
“The market is currently factoring in a rate cut regardless, and now the focus shifts to the size of the cut – how significant will the Fed’s action be,” shared Gainesville Coins chief market analyst Everett Millman in a statement to Reuters.
“Leading up to the next Fed meeting, it’s likely that the gold market will trade sideways, yet there’s a sturdy support level in place due to ongoing geopolitical tensions,” Millman added.
Front-month Comex gold (XAUUSD:CUR) for September delivery closed +0.9% at $2,525.70/oz, while front-month September silver (XAGUSD:CUR) rose +1.2% to $29.557/oz, snapping a two-session losing streak for both metals.
“Geopolitical concerns persist, accompanied by a shift towards de-dollarization and a reversal of Western gold investors from selling to buying last month,” stated Peter Spina, founder and president of GoldSeek.com, in an interview with MarketWatch, highlighting factors contributing to the upward movement in gold prices. “Central banks and individuals are increasingly seeking the safety of gold during uncertain times.”
Furthermore, Spina emphasized the mounting pressures stemming from escalating debts and deficits: “Governments are exceeding their budgets, and it’s becoming evident that significant money printing will be necessary to manage these massive debt burdens.”
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Additional Insight:
Considering the current economic climate and the continued geopolitical uncertainties, it is evident that gold remains a favored safe-haven asset for investors. The ongoing trend of central banks and individuals diversifying their portfolios with gold indicates a long-term bullish outlook for the precious metal. In addition to the traditional factors influencing gold prices, such as interest rates and inflation expectations, the global economic landscape and geopolitical tensions will likely continue to play a significant role in driving gold’s value in the foreseeable future.
