Gold Prices Hit Record High on Dovish Fed Comments and Middle East Tensions
Gold prices soared to a new record high on Tuesday, with spot gold reaching $2,636.85 per ounce, fueled by dovish comments from U.S. Federal Reserve officials and escalating tensions in the Middle East. This surge was further supported by U.S. gold futures rising to $2,661.60.
Fed’s Dovish Stance and Rate Cuts
IG market strategist Yeap Jun Rong noted that gold prices remained strong due to a series of dovish statements from Fed policymakers, including the intention behind the recent half-percentage-point rate cut to maintain a healthy balance in the economy. Chicago Fed Bank President Austan Goolsbee and Fed President Neel Kashkari also hinted at future rate cuts, with traders pricing in 75 basis points in cuts by the end of 2024, as per the CME FedWatch Tool.
Impact of Geopolitical Turmoil on Gold Prices
In addition to the Fed’s stance, geopolitical tensions in the Middle East, particularly the conflict between Israel and Hezbollah, contributed to the rise in gold prices. Yeap Jun Rong stated that the new war front has led to increased flows towards safe-haven assets like gold, with investors seeking to hedge against potential risks of a broader regional conflict. With tensions expected to persist in the region, gold prices are likely to maintain their bullish trend.
Insight on Other Metals
Alongside gold, other metals also saw gains, with spot silver rising to $31.07 per ounce, platinum up to $969.35, and palladium climbing to $1,053.09.
Overall, the current market dynamics, including the Fed’s dovish approach and geopolitical uncertainties, are driving investors towards safe-haven assets like gold, leading to record highs in prices.
(Reporting by Daksh Grover in Bengaluru; Editing by Sherry Jacob-Phillips, Varun H K and Mrigank Dhaniwala)
