Li Xing
Gold set another all-time high on Tuesday, climbing above its previous peak as mounting expectations of Federal Reserve rate cuts and a softer dollar lifted demand. The metal extended gains from last week’s weak US jobs report, which prompted traders to fully price in easing this month and anticipate as many as three cuts by year-end.
The shift in policy outlook has become the dominant driver for the precious metal. Markets assign nearly a 90% probability of a 25-basis-point cut at next week’s Fed meeting, with a smaller chance of a larger move. Lower yields and a weaker currency have further enhanced the appeal of non-yielding assets like gold. Investors now await producer and consumer inflation data due later this week, which could refine expectations for the scale and speed of policy easing. Signs of easing inflation could further raise expectations of a dovish stance from the Federal Reserve. Elsewhere, geopolitical tensions remain an additional support amid persistent regional instability in the Middle East and Eastern Europe.
On the demand side, central bank purchases and steady inflows into gold-backed ETFs continue to underpin the market.
Xing is Financial Markets Strategist Consultant to Exness
