Gold rallies to record high on US rate cut optimism

Gold prices soared to an all-time high on Friday as the dollar weakened amid prospects of super-sized reduction in U.S. interest rates next week, while palladium has gained over 15% so far this week.

Spot gold was up hitting a record 0.3% at $2,567.23 per ounce by 0703 GMT, after high of $2,570.21 earlier in the session. Bullion has gained about 3% for the week so far.

U.S. gold futures rose 0.6% to $2,595.10.

The dollar fell to a one-week low on Friday, making greenback-priced gold less expensive for other currency holders, with investors on tenterhooks around uncertainty of a 25 or 50 basis point U.S. rate cut next week.

“Regardless of the size of the initial Federal Reserve rate cut, we look to be on the verge of a potentially long and frequent easing cycle, which is a scenario that bodes well for assets such as gold, which are non-yielding,” said Tim Waterer, chief market analyst at KCM Trade.

The International Monetary Fund said it was appropriate for the Fed to begin a long-awaited monetary easing cycle at its meeting next week as upside risks to inflation have subsided.Also Read: Gold’s 16% YTD returns surpass Sensex, catching up with Nifty Traders see a 41% chance of a 50-bp reduction and 59% odds of a 25 bp cut.

Investors will scan the U.S. consumer sentiment (preliminary) data, due later in the day, for further clues on rate outlook.

ANZ commodity strategist Soni Kumari said “we are seeing (gold) prices can go to $2,600 in the short term, given the price momentum is looking quite strong right now.”

Spot silver rose 0.3% to $30.01 and platinum gained 0.7% to $983.95. Both metals are headed for weekly gains.

Palladium climbed 0.4% to $1,050.50 and was headed for its best week since December 2023, fuelled by export curb concerns.

Russian President Vladimir Putin said Moscow should consider limiting exports of uranium, titanium and nickel in retaliation against the West.