Gold Breaks $2,600 as Fed Rate Cut Bets Extend Historic Period | World News

Prices of the haven asset rose 26% in 2024, the biggest annual gain since 2010, as investors also sought to hedge uncertainties caused by protracted conflicts in the Middle East and elsewhere.

The record rally could be set for a correction, analysts said.

“There is clearly still some buying activity associated with the Fed’s decision to start its easing cycle with a big cut,” said Daniel Ghali, commodities strategist at TD Securities.

However, “the source of this buying activity remains off our radar,” with ETF (exchange-traded fund) inflows relatively marginal and Asian buyers still on strike, all signs of “extreme positioning,” it added Ghali. (GOL/ETF)

The record rally eroded retail demand in top consumers China and India. (NAKED)

“It shouldn’t go on forever,” Commerzbank said in a note, citing expectations for rate cuts of just 25 basis points each at the Fed’s next two meetings.

However, some analysts said gold could see more upside.

“Geopolitical risks such as ongoing conflicts in Gaza, Ukraine and elsewhere will ensure safe haven demand for gold is supported,” Forex.com analyst Fawad Razaqzada said in a note.

The continued weakness of the dollar, which makes gold cheaper for holders of other currencies, provided additional tailwinds, analysts said. (USD/)

Elsewhere, platinum was down 1.1% at $974.76 and palladium was down 1.7% at $1,062.25.

First publication: September 20, 2024 | 9:02 p.m IST