Rising market expectations for interest rate cuts in September drove gold prices higher, while the attempted assassination of Trump further boosted safe-haven demand for precious metals.
Market expectations for the Fed to cut interest rates in September increased, and with the support of Trump's assassination, the price of gold rose on Tuesday, approaching a record high.
Up to now, the spot gold price has risen 0.68% to reach $2438.76 an ounce, which is only slightly lower than the all-time high of $2449.89 set on May 20.
Previously, gold prices hit record highs in April and May, but declined in June due to cooling expectations of US interest rate cuts and weak physical demand due to high prices.
Federal Reserve Chairman Powell said on Monday that the three US inflation figures for the second quarter of this year “increased confidence to a certain extent” that the rate of increase in inflation may slow down.
This statement has further strengthened expectations of interest rate cuts, and investors are waiting for more US economic data to obtain further monetary policy signals.
According to media quoting WisdomTree commodity strategist Nitesh Shah:
“The uncertainty surrounding the long-awaited pattern of US interest rate cuts may push the price of gold to weaken in the third quarter, then accelerate the pace of rebound, and push the price of gold to a new high.”
As expectations of interest rate cuts approach, another key demand category, gold ETFs, saw another inflow of capital after three years of capital outflows. According to data from the World Gold Council, gold ETFs flowed in 0.5 billion US dollars, or 7.6 metric tons, last week.
Furthermore, the attempted assassination of former US President Trump increased political uncertainty and further boosted safe-haven demand for precious metals.
GraniteShares' Chief Revenue Officer Paul Marino said:
“In times of uncertainty and volatility, you invest in gold, and this is where we are now. People continue to use gold as a safe haven and store of value. Price predictions are hard to be accurate, but they seem to be steadily rising.”
Huatai Securities believes that when the “Trump deal” and the “interest rate cut deal” strengthen at the same time, “weak resonance” is beneficial to assets such as large US technology stocks, Japanese stocks, and steel. If “strong resonance” occurs, assets such as Bitcoin and gold may be favored, and the US bond yield curve will also become steeper.