On Tuesday, September 2, with market expectations of a rate cut by the Federal Reserve this month, the price of gold soared to a historic high, surpassing the record set after the announcement of “Freedom Day” tariffs by US President Trump in April.
In early Asian trading, the spot price of gold briefly rose by 0.9% to $3,508.70 per troy ounce, exceeding the previous all-time high of $3,500.10 set in April. The price later retreated to $3,497 per troy ounce. Precious metal prices have risen by over 30% so far this year, making it one of the best-performing commodities.
Analysts pointed out that investors consider gold as a hedge against inflation and macroeconomic uncertainties, leading to increased demand for the precious metal.
Federal Reserve Chairman Jerome Powell cautiously hinted at an impending rate cut, boosting market expectations of a rate cut this month, thus supporting the latest uptrend in gold prices. An important US jobs report scheduled for release on Friday may further indicate a weakening labor market, supporting rate cuts and increasing the appeal of interest-free precious metals.
Goldman Sachs stated in a recent report that funds flowing into gold exchange-traded funds (ETFs) have become a significant source of demand supporting gold prices. Analysts at the bank predict that by the middle of next year, spot prices could reach $4,000 per troy ounce.
Since early 2023, stimulated demand from central banks around the world has almost doubled gold prices.
Last year, gold surpassed the euro to become the second-largest reserve asset for central banks globally after the US dollar, accounting for 20% of global official reserves.
According to the World Gold Council, major buyers of gold last year included India, China, Turkey, and Poland.