Gold Prices Hover Near Record Highs

Gold prices remained slightly below stability on Wednesday after achieving a new record high in Asian trading.

As of 07:07 ET (11:07 GMT), spot gold was down by 0.03% at $2,656.24 per ounce, having reached a peak of $2,670.43 an ounce earlier in the session.

Factors Influencing Gold Prices

The expectation of declining interest rates has put pressure on the dollar, making gold more attractive for investors since it is a non-yielding asset. Additionally, a rise in safe-haven demand was noted due to Israeli strikes in southern Lebanon, escalating tensions in the Middle East. Support for gold prices also stemmed from various stimulus measures introduced by China to invigorate its sluggish economy.

Federal Reserve Insights

Upcoming comments from Federal Reserve officials and the release of the central bank's preferred inflation measure on Friday could shed light on future borrowing costs.

Citi analysts forecast a total reduction of 125 basis points in rates this year, following a significant 50-basis point cut last week. In contrast, Goldman Sachs expects a 25-basis point decrease at every meeting from November until June 2025.

However, HSBC analysts pointed out that recent remarks from Fed Governor Michelle Bowman, who warned against aggressive rate cuts, could limit gold's upward momentum. She highlighted that major inflation measures remain "uncomfortably above" the Fed's target, opposing the views of several other Federal Reserve officials who felt that the substantial cut was justified given the fading inflation and increasing labor demand pressures.

HSBC analysts concluded that Bowman's perspective, while plausible, is not shared by gold investors, who continue to push for rising prices, reflecting confidence in quicker rate cuts and their implications for gold.