Wednesday saw gold prices break $4,200 per ounce for the first time, continuing a record run as investors flocked to the safe-haven commodity due to geopolitical fears and mounting interest rate cut predictions. After peaking at $4,217.95 earlier, spot gold increased 1.6% to $4,206.59 an ounce at 10:19 a.m. ET (1419 GMT). December delivery U.S. gold futures increased 1.4% to $4,222.30.
The metal has been tearing, and it doesn’t appear to be interested in stopping. Investors have even more motivation to diversify into gold in order to hedge their long stock bets, given the recent resurgence of U.S.-China trade tensions, according to Fawad Razaqzada, market analyst at City Index and FOREX.com.
I wouldn’t bet against gold eventually reaching the $5,000 handle, which is currently only $800 away, Razaqzada said, adding that a little decline is likely to shake out weaker hands and draw in new dip buyers.
After Federal Reserve Chair Jerome Powell expressed dovish sentiment on Tuesday, stating that the U.S. labor market was still stuck in “low-hiring, low-firing doldrums,” the dollar fell against a basket of rivals. Because it is a non-yielding asset, gold is regarded as a conventional buffer against inflation and uncertainty. It also does well in low-rate circumstances. With a 98% chance, traders are pricing in a 25 basis point rate decrease in October. A second cut in December is fully factored in at 100%.
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