Gold reached new all-time highs Tuesday, with the commodity soaring above $2,460 per ounce and showcasing a robust 1.7% gain for the session, driven by heightened investor convictions that the Fed will cut interest rates at its September meeting.

Jerome Powell's remarks during his interview at the Economic Club of Washington Monday appear to have dispelled the last doubts about the start of rate cuts after the Fed chair confidently welcomed the latest inflation reports for the second quarter.

"We've had now three better readings. And if you average them, it's a pretty good pace," Powell said. He further hinted the Fed would be willing to act by lowering interest rates if labor market conditions unexpectedly weaken.

Fed futures indicate traders are fully pricing in a rate cut at the September meeting, placing 93.3% odds of a 25-basis-point cut and a marginal 6.7% chance on a larger 50-basis-point cut, according to the CME Group's FedWatch tool.

Yields on the 10-year Treasury note dropped by 7 basis points Tuesday to 4.16%, eyeing the lowest close since mid-March. The rise in gold and the reduction in Treasury yields spurred a rally in gold mining stocks.

The VanEck Gold Miners ETF (NYSE:GDX) soared by 3.3% on Tuesday, achieving its highest level since April 21, 2022. Its rally since the lows of February 2024 has now extended to 55%.

Chart: Gold Mining ETF Reaches Levels Unseen In 27 Months

Image: Benzinga Pro

Bank Of America Predicts Strong Gold Miner Earnings

"With the sharp and sustained move higher in gold prices, we think that there will be an increased focus on capital allocation in the sector," wrote Bank of America analyst Lawson Winder.

Winder suggested that companies in the mining sector might increase dividends or buy back shares to boost stock value.

He emphasizes the importance of second-quarter guidance updates, noting that positive guidance can lead to substantial outperformance.

Winder also expects a focus on organic production growth and potential acquisitions, especially given the slowdown in corporate acquisition activity and the availability of assets for sale following Newmont Corp. (NYSE:NEM)'s acquisition of Newcrest Mining.

Tuesday's Movers Among Gold Miners

Tuesday's leading performers within the VanEck Gold Miners ETF were:

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