Gold Prices Update

Gold prices hovered just below the flatline on Wednesday after reaching a record high in Asian trade.

At 07:07 ET (11:07 GMT), spot gold was down by 0.03% at $2,656.24 per ounce, after earlier touching a record high of $2,670.43 in Asian trade.

Factors Influencing Gold Prices

• The prospect of declining interest rates weighed on the dollar, boosting gold prices as traders factor in lower opportunity cost for investing in non-yielding assets.
• Increased safe-haven demand was observed due to heightened tensions in the Middle East following Israeli strikes in southern Lebanon.
• Support for gold also stemmed from various stimulus measures announced by China aimed at rejuvenating slowdown in the economy.

Federal Reserve Insights

• Comments from Federal Reserve speakers, along with the upcoming release of the central bank’s preferred inflation gauge on Friday, may provide further insights into the future path of borrowing costs.
• Citi analysts forecast a total rate cut of 125 basis points this year following a significant cut of 50 basis points last week.
• Goldman Sachs predicts cuts of 25 basis points at every meeting from November until June 2025.

However, HSBC analysts noted caution from Fed Governor Michelle Bowman regarding steep rate reductions, which might restrain gold’s recent strength. Bowman defended her vote against the significant rate cut, pointing out that major inflation metrics remain “uncomfortably above” the Fed’s target.

Despite differing opinions within the Fed, many analysts believe that anticipated rapid rate cuts are driving gold prices higher, marking repeated record highs, indicating strong investor confidence in gold’s future performance.