(RTTNews) – Gold prices surged to a new record high on Monday, as investors’ expectations for further US interest rate cuts following last Wednesday’s announcement ran high along with continuing safe-haven demand triggered by geopolitical tensions.
Front Month Comex Gold for September delivery jumped by $69.20 (or 1.88%) to a new record closing high of $3,740.70 per troy ounce.
Front Month Comex Silver for September delivery skyrocketed $1.2630 (or 2.97%) to a new 52-week high of $43.799 per troy ounce.
On September 17, the US Federal Reserve instituted its first rate cut of this year, lowering rates by 25 basis points to a range of 4.00% to 4.25%. The Fed’s Summary of Economic Projections (SEP) also hinted at the possibility of two more rate cuts before the end of this year.
Of note, new Fed Governor Stephen Miran was in favor of a larger 50 basis point cut at last week’s meeting.
As of August, while unemployment is near 4.5%, annual CPI inflation is hovering at 2.9% with core inflation at 3.1%. With the task of balancing inflation and unemployment, the Fed is walking a tightrope.
Fed Chair Jerome Powell is due to deliver remarks tomorrow. Throughout this week, various other Fed officials are also set to speak. Traders are awaiting the remarks to assess the outlook for interest rates and the likelihood of an aggressive easing cycle.
The next Federal Open Market Committee meeting is scheduled for October 28-29, with the final meeting of the year set for December 09-10.
According to CME Group’s FedWatch Tool, investors are betting on a 91.9% chance of a 25 basis point rate cut at the Fed’s October meeting.
Meanwhile, Russia is showing no intention of stopping its war with Ukraine. Recent aerial incursions by Russia into the airspaces of NATO member nations (viz., Poland, Estonia), has unified the EU to take steps against Russia.
To that end, when asked if the US would support EU members in the case of an escalation of hostilities, US President Donald Trump responded positively.
In the Middle East, after the September 9 attacks by Israeli Defense Forces on Doha targeting Hamas leaders sheltered there, Qatar has paused its role of mediating a ceasefire between Israel and Palestine. Reportedly, Qatar may move forward brokering the peace process if Israel offers an apology for killing a Qatari officer in its strike.
However, despite the widespread condemnation on the incident, Israeli Prime Minister Benjamin Netanyahu has warned Qatar to expel all the Hamas leaders failing which he threatened more attacks.
On the tariff front, Trump’s administration is battling a lower court verdict that deemed “reciprocal tariffs” as “illegal.” Officials are apparently confident, as the White House has won 18 high-profile victories at the Supreme Court since Trump took office.
A final judgment expected by next June may clear the air on the validity of the tariffs.
A multitude of factors, including recent Fed rate cuts as well as expectations of future cuts, tariff uncertainty, and ongoing geopolitical tensions have largely boosted gold prices.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
