Gold prices reached an all-time high in early trading this week, driven by substantial inflows into exchange-traded funds (ETFs). The surge in gold investment reflects growing expectations that the US Federal Reserve will continue its cycle of interest rate cuts. Silver prices also experienced gains, with year-to-date increases exceeding 50 per cent.
The price of gold spiked above $US3700 an ounce, extending a five-week rally, as investors reacted to the Fed’s recent rate cuts and indications of further easing measures throughout the year. Bullion-backed ETFs saw a significant increase, jumping 0.9 per cent on Friday, marking the largest percentage increase since 2022, according to data compiled by Bloomberg.
Gold and silver have emerged as top-performing major commodities this year, benefitting from a combination of factors. These include the Federal Reserve’s accommodative monetary policy, central banks increasing their reserve holdings, and persistent geopolitical tensions driving demand for safe-haven assets. Financial institutions like Goldman Sachs have indicated expectations for continued price increases.
Analysts suggest that technical indicators appear strong, and expectations for deeper rate cuts are rising. Soni Kumari, commodity strategist at ANZ Group Holdings, noted the breaking of resistance levels in both silver and gold, suggesting further upward momentum. Traders will be closely monitoring upcoming US personal consumption expenditures data for August, as well as a speech by Federal Reserve Chairman Jerome Powell, for further clues on the economic outlook and potential policy adjustments.
