Gold rush: Fed’s policy shift sparks record-breaking prices

Gold prices soared to an all-time high today as traders anticipate the Federal Reserve’s first shift towards easing monetary policy in over four years.

The price of bullion jumped by up to 0.4%, hitting a peak of US$2,589.03 per ounce during Asian trading hours, today, September 17. This comes after a 3.2% increase last week, with eyes now on the Fed’s meeting from September 17-18, where a 25 basis point rate cut is widely expected.

There’s a buzz in the markets about whether the Fed might go for a larger, half-point cut. Lower borrowing costs typically boost gold’s allure, as the metal doesn’t yield interest.

Adding to gold’s shine, the US dollar dived following reports of an alleged assassination attempt on former President Donald Trump, further driving gold’s ascent.

Gold has rocketed more than 25% this year, reaching a new high last Friday. The surge is driven by expectations of a Fed pivot towards monetary easing, central bank buying, and strong demand for safe-haven assets amid ongoing Middle East and Ukraine conflicts. Retail investor interest is also climbing.

As of 11.20am in Singapore, spot gold was up 0.3% to US$2,585.49 per ounce. The Bloomberg Dollar Spot Index fell 0.2%, adding to a 0.8% decline over the past three sessions. Silver and platinum prices have risen, while palladium has stayed relatively steady, said one market analyst.

“Market sentiment is clearly bullish on gold, given the current global economic uncertainties and geopolitical tensions.”

All eyes are on the Fed’s next move, as its decisions could have a major impact on global markets. A rate cut could further weaken the dollar, making gold a more attractive alternative investment, noted another economist.

The anticipation of a Fed policy shift is also impacting other precious metals. Silver and platinum have seen gains, reflecting broader optimism towards commodities that offer value during uncertain times. Palladium, primarily used in industrial applications like catalytic converters, remains steady.

As the Fed’s meeting approaches, market participants brace for potential volatility. The outcome will likely set the tone for the rest of the year, influencing investment strategies and market dynamics, reported Bangkok Post.