Gold prices soared to an all-time high above $2,100 per ounce on Monday, buoyed by comments from Federal Reserve Chairman Jerome Powell.
These remarks have bolstered traders’ confidence that the U.S. central bank might reduce interest rates early next year.
Lower interest rates decrease the opportunity cost of holding the non-interest-bearing yellow metal. As of 05:30 GMT, spot gold prices climbed 0.8% to $2,087.69 per ounce.
Earlier in the session, gold peaked at a record high of $2,111.39. U.S. gold futures also saw an increase of about 1% to $2,107.50.
According to Tim Waterer, Senior Market Analyst at K.C.M. Trade, Powell’s speech has convinced traders that the U.S. is currently at the peak of its interest rates, suggesting that the next move is likely to be a downward trend rather than an upward one.
Powell, on the previous Friday, stated that the Federal Reserve is not considering cutting interest rates at the moment.
In other precious metals, spot silver rose 0.1% to $25.45 per ounce, while palladium fell 0.5% to $929.10 per ounce, and platinum decreased by 0.4% to $996.04.
Analysts highlighted that the gold is benefitting also from the Israel-Hamas war.
“Concerns about the shaky global economic backdrop and the Israel-Hamas conflict have fuelled investor demand for safe-haven assets like gold,” said Victoria Scholar, head of investment at Interactive Investor.
“Plus, expectations for Fed rate cuts next year have put downward pressure on the US dollar which is trading around three-month lows, adding to gold’s attractiveness,” Scholar added.
The US Dollar is going all in for risk-off as tensions in the Middle East are creating risk-off across the board in equity markets. With a flight to safe havens, yields are soaring in favor of the Greenback, which sees traders come back and buy the US Dollar.