Gold Price Hits Record High Amid Economic Uncertainty

Gold prices surged by more than 21% this year, reaching a record high of $2,531.60 per ounce on August 20. Although prices adjusted slightly downward on Tuesday, they remained above the $2,500/oz mark.

The rise in gold prices is attributed to several factors: optimism about investment opportunities, anticipated US interest rate cuts, and ongoing geopolitical tensions in the Middle East. Currently, the spot price of gold stands at $2,513/oz, while US gold futures have declined by 0.3% to $2,548.20/oz.

A planned interest rate cut by the Federal Reserve in September is contributing to the volatility. The exact size of the cut remains debated, with expectations leaning towards a quarter-percentage point reduction. According to IG market strategist Yeap Jan Rong, the uncertainty surrounding the rate cut has led investors to adopt a 'wait-and-see' approach, monitoring economic data for further insights. Mary Daly, President of the San Francisco Federal Reserve, has suggested that a modest rate cut is likely.

Gold is traditionally seen as a safe-haven investment, its appeal growing when interest rates are low, and during periods of geopolitical and economic uncertainty. The ongoing conflicts in Gaza and Ukraine, combined with potential global financial disruptions, have bolstered gold’s status as a secure investment.

Commodity strategist Soni Kumari from ANZ forecasts that gold prices might reach around $2,550 in the mid-to-long term, although the market might seek a correction. In comparison, silver and palladium prices have seen minor increases of 0.2% and 0.7%, respectively, while platinum prices have decreased by 0.7%.