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Gold prices hit two-month high amid Fed rate cut expectations and weaker dollar
🇲🇾 Malaysia /Economy & Trade

Gold prices hit two-month high amid Fed rate cut expectations and weaker dollar

From Utusan Malaysia · () Malay

Translated from Malay, summarized and contextualized by DistantNews.

At a glance

News Named sources Context piece
  • Gold prices reached their highest level in two months on Thursday, driven by expectations of a US Federal Reserve rate cut and a weakening US dollar.
  • Experts cite multiple factors, including monetary policy and geopolitical tensions, influencing gold's price movement.
  • Forecasts suggest gold could reach US$4,800 to US$5,000 per ounce in the near future, supported by anticipated Fed rate cuts and continued central bank purchases.

Gold prices surged to their highest point in two months on Thursday, a rise attributed by experts to anticipated interest rate cuts by the U.S. Federal Reserve and a weakening U.S. dollar. The continuous gold contract saw a slight increase, trading at US$4,551.10 per ounce by late Wednesday, up from US$4,545.30 the previous day.

Mohd Faizal Mohd Nor, CEO of Nubex Sdn. Bhd., stated that gold's price is not dominated by a single factor but rather a combination of monetary pressures and concurrent geopolitical conditions. Key drivers include expectations of Fed rate reductions, ongoing purchases by central banks diversifying their reserves away from the U.S. dollar, and persistent geopolitical tensions.

There is no single factor dominating. It is more of a combination of monetary pressures and concurrent geopolitical conditions.

— Mohd Faizal Mohd NorCEO of Nubex Sdn. Bhd., explaining the multiple factors influencing current gold price movements.

Several international firms, including UBS and Ventura, project that gold prices could potentially reach between US$4,800 and US$5,000 per ounce in the near term. This optimistic outlook is bolstered by the expectation of Fed rate cuts and sustained gold acquisitions by central banks. Faizal noted that gold remains in a long-term upward trend, or a secular bull market, which naturally includes price corrections.

However, potential price corrections could occur if U.S. inflation data rises, diminishing the likelihood of Fed rate cuts. A sudden de-escalation of current geopolitical tensions could also put downward pressure on gold prices. Professor Dr. Ahmed Razman Abdul Latiff of Putra Business School added that tensions in the Middle East and global trade uncertainties are prompting investors to increase their portfolio protection with gold as a safe-haven asset. He also highlighted structural demand from central banks and investors as supporting factors for the precious metal's price increase.

In the short term, the upward momentum is still there, but the room for increase does not mean prices will rise continuously.

— Prof. Dr. Ahmed Razman Abdul LatiffDirector of MBA Program, Putra Business School, commenting on the short-term outlook for gold prices.
DistantNews Editorial

Originally published by Utusan Malaysia in Malay. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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