Gold prices surged to a new record high on Monday as the dollar softened and expectations of a larger interest rate cut by the U.S. Federal Reserve this week grew.
In the UAE, gold prices remained steady with 24-carat gold at AED313 and 22-carat gold at AED290. Meanwhile, 21-carat gold remained unchanged at AED280.50 and 18-carat gold was at AED240.50.
Globally, spot gold edged up 0.27 percent to $2,586.05 as of 5:11 GMT, after hitting a new record high of $2,589 earlier in the session. Meanwhile, U.S. gold futures rose 0.12 percent to $2,613.80.
The U.S. dollar index fell 0.25 percent to 100.86, making gold less expensive for other currency holders.
Larger Fed rate cut
Expectations that the Fed will potentially cut interest rates by 50 basis points this week further supported gold prices to a new high and placed downward pressure on the dollar. Analysts expect additional gains for gold as conditions remain favorable. If the dollar remained softer, gold prices may reach $2,700 by the end of the year.
Market attention now shifts to the Fed’s September 17-18 monetary policy meeting as speculations over the size of the rate cut. The Bank of England and the Bank of Japan will also be announcing policy decisions later this week.
Markets are currently pricing in a 59 percent chance of a 50-basis-point cut on Wednesday, up from 43 percent on Friday, and a 41 percent chance of a 25-basis-point cut, according to the CME FedWatch tool. This would mark the U.S. central bank’s first interest rate cut since 2020.
Data on Friday revealed that U.S. consumer sentiment improved in September amid slowing inflation. However, Americans remained cautious ahead of the November presidential election.
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Other precious metals
The precious metals market saw positive movement as gold prices set a new record high with spot silver gaining 1.05 percent to $30.98 and platinum rising 0.25 percent to $997.75. In addition, palladium inched up 0.32 percent to $1,071.85.
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