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XAU/USD: Gold Extends Three-Week Bull Run to $2,440 on Bright Rate Cut Prospects
Key points:
- Gold nears all-time record of $2,450.
- Prices are higher by 20% on year.
- Jay Powell boosts rate cut bets.
Fed chief Jay Powell said Monday that inflation was moving sustainably down towards the central bank’s 2% target.
- Gold prices
XAUUSD advanced to start the week after a speech by Federal Reserve Chair Jay Powell raised gold bugs’ bets on interest rate cuts. The precious metal rose to a two-month high of $2,440 per ounce, coming off a three-week winning streak. The powerful gain is inching closer to gold’s all-time high $2,450 per ounce hit in May. - Fed boss Jay Powell lifted hopes that interest rate cuts may be coming sooner than previously anticipated. Speaking at the Economic Club of Washington on Monday, Jay Powell struck an optimistic tone on inflation. He said that recent strings of economic data are building “greater confidence that inflation is moving sustainably down towards the 2% target.”
- How are lower rates benefitting gold? Gold is a non-yielding asset, meaning it doesn’t generate yield to its holders. When rates are low, the opportunity cost of holding gold diminishes, i.e. it becomes more attractive in a low-interest-rate environment. Against that backdrop, gold has staged an impressive run this year. The yellow commodity is up a hefty 20% since the start of 2024.