Gold Reaches Record Highs as Markets Brace for U.S. Rate Cut Decision.
Gold prices have soared to an all-time high, hitting $2,531 per troy ounce this week, fueled by heightened interest from Western investors expecting a U.S. rate cut. The surge is part of a broader 20% increase in gold’s value this year. Hedge funds and institutional players are snapping up gold, driving its price upward and reshaping their portfolios. After months of lagging behind, Western investors are now joining the rally, a trend driven largely by Asian markets earlier in the year.
Previously, Chinese buyers dominated the gold market, seeing it as a safe haven amid turbulence in their stock and real estate markets. Now, with U.S. and European buyers piling in, gold’s recent climb from around $2,300 in June to its current record high has fresh momentum.
Gold futures on Chicago’s Comex market — popular with Western investors — hit their highest levels since the COVID-19 pandemic. According to the Commodity Futures Trading Commission, over 100 tons of gold were added in just one week, ending August 13. This jump was mirrored by ETFs backed by physical gold, which saw their holdings rise by 90.4 tonnes since May, valued at $7.3 billion.
For nearly 20 months, Western investors overlooked gold’s rally, while Chinese buyers drove prices higher. Now, as rate cuts loom in the U.S., Western investors are back in play, contributing to gold’s new highs. Economist John Reade notes that this surge is largely driven by “fast money” in the West. The anticipation of a nearly one percentage point rate cut by year-end is keeping prices buoyant.
Moreover, family offices are making opaque purchases over the counter, concerned about a potential dollar devaluation, further supporting gold prices.
Conclusion
The anticipation of U.S. rate cuts has reignited interest in gold among Western investors, driving it to unprecedented heights. With both speculative traders and institutional investors in the mix, gold remains a key asset in navigating economic uncertainties. The stage is set for more gains as global markets continue to react to evolving monetary policies.
Key Takeaways
- Gold reached an all-time high of $2,531 per troy ounce.
- Western investors are now driving the rally after lagging behind Asian markets.
- Gold futures and ETFs have seen significant inflows, signaling renewed investor interest.
- U.S. rate cuts are expected to further bolster gold prices.
- Bitcoin faces resistance, with analysts predicting potential recovery.
Source: Cryptopolitan
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