Gold prices bolted to an all-time high above $2,100 per ounce on Monday as Federal Reserve Chair Jerome Powell’s remarks elevated traders’ confidence that the US central bank could cut interest rates early next year.
Lower interest rates reduce the opportunity cost of holding a non-interest-bearing bullion.
Spot gold was up 0.7 percent at $2,085.76 per ounce. Earlier in the session, bullion surged to an all-time high of $2,111.39.
US gold futures rose nearly 1 percent to $2,107.60.
“After his (Powell) speech, traders were more convinced that we’re currently at the peak of the US interest rates and therefore that the path forward from here is more likely to be down rather than up,” said KCM Trade chief market analyst Tim Waterer.
“Liquidity does tend to exacerbate some moves in the market … and also still there are safe-haven buying element there as well,” Waterer said.
Powell on Friday said “the risks of under- and over-tightening are becoming more balanced,” but the Fed is not thinking about lowering rates right now.
Traders are now pricing in a 70 percent chance for a rate cut by the US central bank by next March, FedWatch Tool showed.
The market viewed his comments as dovish, sending the dollar index and 10-year Treasury yields lower on Friday, making gold more attractive for other currency holders. – Reuters
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