The spot gold price suddenly jumped over $20, reaching a maximum of $2,526.22 per ounce, once again hitting a new historical high. According to the CME's "Fed Watch" tool, the median prediction suggests that "25 basis points + 25 basis points + 25 basis points" is the most likely rate cut path for the bank this year.
On Tuesday (August 20), during the European trading period, the spot gold price suddenly jumped more than $20 to reach a maximum of $2,526.22 per ounce, once again hitting a new historical high.
Daily chart of spot gold.
At the time of publication, the spot gold price had fallen slightly and was now at $2,524 per ounce; intraday, the main international gold futures price also rose to $2,564.6 per ounce, also setting a new record, but has since fallen back to around $2,562.
Analysis suggests that driven by expectations of a rate cut by the Federal Reserve next month, investors are flocking to this safe-haven asset. This month, the spot gold price has risen by more than 3%, and this year's rise has reached 22%, which is still based on a cumulative rise in the price of gold of more than 13% in 2023.
Carsten Menke, an analyst at Julius Baer Bank, said that gold traders are again focusing on the prospect of a US rate cut, which has attracted Western safe-haven investors back to the market, as evidenced by the inflow of funds into physical products.
In a low-interest-rate environment, gold often becomes more attractive. According to the CME's "Fed Watch" tool, the median prediction suggests that "25 basis points + 25 basis points + 25 basis points" is the most likely rate cut path for the bank this year.
But compared to the market's expectations immediately after the non-farm payroll report was released earlier this month, the expected path has now eased somewhat. Ole Hansen, head of commodity strategy at Saxo Bank, said that the rate cut will still depend on whether upcoming economic data continues to support the recent weakness in key economic indicators.
Hansen believes that today's drivers are not primarily the US dollar or US bond yields, but rather the positive momentum of gold prices and lower selling pressure, which means that the upward path faces less resistance.
The Jackson Hole Global Central Bank Annual Meeting will be held this week, and Powell's speech on Friday may set the tone for a rate cut in September. Before that, Thursday's initial claims report may also affect the Fed's future rate cut plans.
Antonio Ernesto Di Giacomo, senior market analyst at XS Trading, said that in addition to the prospect of a rate cut by the Federal Reserve, the recent surge in gold prices reflects the "rise in uncertainty" and "investor flight to safety".
"The historical breakthrough of gold over $2,500 per ounce reflects the increase in global economic uncertainty and investors' ongoing pursuit of safety. Driven by economic, geopolitical, and monetary factors, gold is consolidating its position as a safe-haven asset in turbulent times."
On the geopolitical front, there is still no obvious cooling trend in the two battlefields of Russia-Ukraine and Palestine-Israel. Russian Foreign Minister Lavrov mentioned yesterday that Putin clearly stated that after the attack on Kursk State in Ukraine, any negotiations were impossible.
Earlier today, the Israeli military said that air defense alarms sounded in multiple areas such as the Israeli Upper Galilee and the Golan Heights occupied by Israel, and that about 55 rockets were fired from Lebanon towards Israel. Some of the rockets were intercepted by the Israeli army, and the rest fell in uninhabited areas without reports of casualties.