(Reuters) – Gold prices rose above $2,600 on Friday, hitting a record high on expectations of further U.S. rate cuts, boosting the appeal of the yellow metal amid global uncertainty.
At around 08:40 GMT, spot gold rose by more than 1% to $2,612.60, reaching an unprecedented level.
U.S. gold futures were up 0.6% at $2,630.00, while silver was up 1.1% at $31.12.
The Federal Reserve on Wednesday cut its target for the fed funds rate by 50 basis points to 4.75%-5.00%, and policymakers have suggested another half-point cut is on the cards by the end of the year. That should be followed by another 100-point cut in 2025 and another 50-point cut in 2026.
Since gold does not generate a yield, a drop in key rates makes it more attractive.
“We remain very positive on gold as it is largely under-exploited in the Western world and is one of the few assets that can counter the many fiscal threats today,” said Ryan McIntyre, portfolio manager at Sprott Asset Management.
“Beyond rate cuts, gold will also benefit from the continued depreciation of the US dollar, the precarious fiscal situation of many Western countries and the global desire for a store of value independent of other assets and institutions.”
A weaker dollar also makes buying gold bullion more attractive for investors holding other currencies.
Gold bullion has risen more than 26% since the start of the year as conflicts in the Middle East and Europe have added to investor uncertainty.
According to Kyle Rodda, financial markets analyst at Capital.com, gold could reach $2,700 to $2,800 in the next 12 months.
China, the world’s top gold consumer, decided in August not to import gold from Switzerland, a first in more than three years, while in India, traders have sacrificed margins after recent increases. [GOL/AS]
Among other metals, palladium rose 0.5% to $1,085.77, while platinum lost 0.3% to $986.01, heading for a weekly decline.
(Reporting by Ashitha Shivaprasad and Daksh Grover in Bangalore; French version by Claude Chendjou, edited by Sophie Louet)
by Ashitha Shivaprasad
