Gold Breaks New Record, What's the Trigger?
The price of gold (XAU/USD) rose again and broke through the psychological level of $3,713 per ounce, setting a new record high early in the European session on Monday. This increase was driven by two main factors: dovish signals from the Federal Reserve (The Fed) and rising geopolitical tensions, particularly the escalating war between Russia and Ukraine. This combination strengthens gold's position as a safe-haven asset sought by investors during times of global uncertainty.
The Fed's signal that two more interest rate cuts are possible before the end of the year weakened the appeal of interest-bearing assets and boosted interest in the precious metal. Because gold is non-yielding, it tends to rise when interest rates are low, as the opportunity cost of holding it decreases. This is the second consecutive day that gold has strengthened on expectations of looser monetary policy in the US.
Meanwhile, the US dollar (USD) began to lose momentum after recovering from its lowest level since July 2022. The weakening dollar provided an additional boost to gold, as it became cheaper for holders of other currencies. This strengthens gold's global appeal. Even as risk sentiment in global markets remains positive, strong fundamentals continue to support the upward trend in gold prices.
However, while the short-term outlook remains positive, overbought technical conditions could limit further gains in the near term. Nevertheless, gold's current trend remains upward, and the opportunity to reach new highs remains open, especially if geopolitical tensions continue to escalate and the Fed remains consistent with its dovish stance. (ads)
Source: Newsmaker.id
