Sept 19 (Reuters) — Gold prices surged on Thursday, maintaining their elevated position after reaching a record high in the previous session. This uptick follows the U.S. Federal Reserve’s decision to enact a substantial interest rate cut.
Spot gold advanced by 0.8% to $2,578.40 per ounce as of 07:34 GMT, after peaking at a historic high of $2,599.92 on Wednesday. Meanwhile, U.S. gold futures saw a modest increase of 0.2%, reaching $2,604.20.
Despite the dramatic rate cut, Federal Reserve Chair Jerome Powell emphasized that the U.S. economy remains robust. He highlighted that job market indicators, including unemployment claims and the current unemployment rate of 4.2%, are not cause for concern.
Market Reactions and Predictions
“Gold prices are stabilizing near yesterday’s closing levels as markets adjust to the volatility following the Fed’s decision,” commented Ilya Spivak, Head of Global Macro at Tastylive.
Gold, which does not yield any interest, often becomes a favored investment during periods of low interest rates and geopolitical instability. Market participants are now speculating on future Fed actions, with current predictions suggesting a 65% probability of a 25 basis point reduction at the Fed’s November meeting and a 35% chance of a 50 basis point cut, according to the CME FedWatch tool.
Kelvin Wong, Senior Market Analyst for Asia Pacific at OANDA, predicts that gold could reach new highs this year, with potential targets between $2,640 and $2,700. “We anticipate that softening economic data could act as a catalyst for higher gold prices,” Wong said.
Upcoming Economic Data and Geopolitical Tensions
The market will also be closely watching the upcoming initial U.S. jobless claims data, set to be released at 12:30 GMT. This data will provide further insights into the health of the labor market and could influence gold prices.
On the geopolitical front, tensions in the Middle East are escalating. Hezbollah’s devices exploded again in Lebanon on Wednesday, exacerbating fears of a broader regional conflict. This incident follows similar explosions from the group’s pagers the previous day.
Other Precious Metals Performances
In addition to gold, other precious metals also experienced gains. Spot silver rose by 3.4%, reaching $31.09 per ounce. Platinum climbed 1.8% to $985.85, and palladium saw a 1.4% increase, trading at $1,076.50.
These movements in precious metals reflect a broader trend of increased interest and investment in safe-haven assets amid ongoing economic and geopolitical uncertainties.