May 20 (Reuters) – Gold hits record high on Fed rate cut bets
On Monday, gold prices surged to a record high as investors reacted to U.S. economic data from the previous week that indicated the possibility of the Federal Reserve cutting interest rates twice this year.
Spot Gold Reaches New Heights
Spot gold rose by 0.6% to $2,430.19 per ounce, reaching a peak of $2,440.49 earlier in the trading session. Meanwhile, U.S. gold futures also experienced a 0.7% increase, reaching $2,434.50.
Federal Reserve’s Stance on Rate Cuts
Despite positive economic data last week, the Federal Reserve has not openly shifted its views on the timing of potential rate cuts. Fed Governor Michelle Bowman expressed concerns about inflation remaining stagnant and hinted at a possible rate hike if necessary.
Impact of Rate Cuts on Gold Prices
Gold is commonly seen as a hedge against inflation, but higher interest rates can diminish the appeal of holding non-yielding assets like gold.
Insight on Global Market Conditions
In the global market, investors remain optimistic about the Fed cutting U.S. interest rates, which is expected to stabilize the U.S. dollar, bond yields, and volatility. This positive sentiment is bolstering risk assets and keeping market conditions favorable for gold and other precious metals.
China’s Efforts to Stabilize Property Sector
China recently announced significant measures to stabilize its struggling property sector, including additional funding by the central bank and easing mortgage rules. These actions could have implications for the broader economic landscape and potentially influence gold prices.
While the data and events mentioned in the article set the stage for gold’s record-high prices, broader economic trends and geopolitical developments will continue to shape the precious metals market in the future.
