Gold prices have surged beyond the $2,600 mark, setting a new record amid a weakening US Dollar.
Factors Driving Gold’s Rise
The advance in gold prices comes as expectations grow for additional interest rate cuts by the Federal Reserve. Following an aggressive rate cut on Wednesday, the Fed projected another 50 basis points reduction by the end of the year. This outlook has contributed to lower US Treasury bond yields, further undermining the strength of the US Dollar and benefiting gold, which does not yield interest.
Additionally, ongoing concerns about economic slowdowns in both the United States and China—the world’s two largest economies—along with rising geopolitical risks, particularly in the Middle East, have further supported gold prices.
Market Sentiment
Despite these factors, a prevailing risk-on sentiment in the markets may limit new investments in gold, capping its upside potential. However, gold is on track to finish the week positively for the second consecutive time, and the current fundamental environment suggests potential for continued gains.
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