Gold prices are continuing their ascent, reaching record highs, driven by recent comments from Federal Reserve Chair Jerome Powell.
His remarks have reinforced market expectations of an interest rate cut in September, which typically supports the yellow metal’s attractiveness by lowering the opportunity cost of holding non-yielding assets like gold.
During his speech at the Jackson Hole Symposium, Powell hinted at the Federal Reserve’s readiness to adjust its monetary policy based on forthcoming economic data. This has supported market confidence that the Fed will reduce rates, with current projections indicating a potential cut of either 25 basis points (bps) or 50 bps in the upcoming September meeting.
Moreover, expectations of a total reduction of 100 bps by the end of the year are further supporting gold prices.
The recent drop in the U.S. dollar and Treasury yields, both of which have hit their lowest levels this year, has also played a role in driving gold prices higher. Any additional decline in these factors could further benefit gold.
Geopolitical tensions, particularly in the Middle East, combined with broader economic uncertainties, are driving heightened interest in gold as a safe-haven asset. These ongoing factors are expected to sustain gold’s appeal and support its price, as investors turn to gold for stability in the face of potential global disruptions.
