Gold prices edged closer to record highs on Wednesday, driven by rising interest in non-yielding bullion amid falling U.S. bond yields and anticipated rate cuts from major central banks. Ongoing geopolitical tensions have also added to its appeal as a safe-haven asset.
Spot gold rose about 0.6% to $2,676.03 per ounce, inching close to a record high of $2,685.42 it hit on Sept. 26. U.S. gold futures gained 0.5% to $2,692.60.
“Expectations of a 25-basis-point rate cut by the U.S. Federal Reserve in November are solidifying, weaker inflation data in Europe and the UK have increased expectations for more aggressive ECB and BoE easing, leading to generally lower yields, which have lifted gold,” said Peter A. Grant, vice president and senior metal’s strategist at Zaner Metals.
“There’s even an outside chance we could see close to $3,000, and that’s probably more of a Q1 2025 target,” Grant said.
U.S. Treasury yields dropped to their lowest level in over a week, which makes gold more appealing, since it typically performs well in a low interest rate environment.
According to the CME FedWatch tool, Traders are estimating a 96% likelihood of a 25-basis-point rate cut by the U.S. in November.
Meanwhile, the European Central Bank is expected to announce another rate cut on Thursday, and a recent drop in British inflation suggests that the Bank of England may also follow suit with a cut next month.
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