Gold prices scaled another record high on Wednesday as the U.S. dollar weakened amid optimism over lower U.S. interest rates as the market awaited economic data for more clues on the U.S. economy’s trajectory.
In the UAE, gold rates gained AED3.75 with 24-carat gold inching up to AED322 and 22-carat gold rising to AED298. Meanwhile, 21-carat gold reached AED288.50 and 18-carat gold was at AED247.25.
Globally, spot gold rose 0.04 percent to $2,659.19 as of 5:30 GMT, after hitting a fresh record high of $2,670.15 earlier in the session. In the last six months, gold prices have gained close to 22 percent. Meanwhile, U.S. gold futures rose 0.21 percent to $2,682.60.
The dollar index fell 0.21 percent to 100.26, making gold cheaper for other currency holders.
Rate cut prospects continue to support gold
Gold prices recorded a new high following China’s decision to issue new support measures including outsized rate cuts. China’s rate cut will likely further support demand for gold in the world’s largest consumer of the precious metal. Hence, a low interest-rate environment tends to boost the appeal of non-yielding assets.
Last week, the U.S. Federal Reserve cut interest rates by 50 basis points, prompting gold prices to surge to an all-time high. Currently, markets are pricing a 60.2 percent chance for another 50-basis-point cut, according to the CME Fedwatch tool.
Traders now await Fed chair Jerome Powell’s remarks on Thursday and U.S. inflation data on Friday for further policy cues.
Elsewhere, geopolitical tensions in the Middle East persisted, raising fears of a full-scale regional war which further supported gold prices, considering that the yellow metal is a hedge against economic and political uncertainty.
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Other precious metals
Amid the surge in gold prices to a new record high, the precious metals market witnessed mixed movement. Spot silver fell 0.70 percent to $31.91 while platinum gained 0.07 percent to $986.45. However, palladium declined 0.70 percent to $1,049.00.
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