Gold maintained its recent gains, trading above $3,700 per ounce for the first time, supported by investor bets on an interest rate cut at today’s US Federal Reserve meeting. The precious metal was trading less than $10 below Tuesday’s new record of $3,703.07 per ounce.
The rally was also bolstered by the weakening of the US dollar, with a key index falling to levels not seen since March 2022. A weaker dollar makes gold cheaper for holders of other currencies.
According to Bloomberg, investors are focused on the Fed’s decision, with markets widely expecting a 0.25% rate cut. Strong US retail sales figures on Tuesday did not alter those expectations. Lower interest rates are considered positive for gold, which does not generate interest.
Gold prices have surged more than 40% this year, driven by geopolitical uncertainty, concerns over US tariffs’ impact on the global economy, and large-scale purchases by central banks — particularly in emerging markets. Analysts see further room for growth, with Goldman Sachs predicting prices could approach $5,000 per ounce.
The dollar index fell to a three-month low before recovering slightly to 96.73 today.
Meanwhile, US President Donald Trump’s attacks on the Fed’s independence added momentum for gold. His legal dispute with Fed Chair Lisa Cook underscores his attempts to steer US interest rates and the dollar to his advantage. Trump has also managed, at least temporarily, to place his economic adviser Steven Miran on the Fed’s board.
At 8:20am Singapore time, gold was up 0.1% at $3,694.24 per ounce. The Bloomberg Dollar Spot Index dipped after Tuesday’s 0.5% drop. Silver held just below a 14-year high, palladium rose, and platinum remained steady.
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