Investing.com — Gold prices rose to record highs in Asian trading on Wednesday, continuing a strong run of recent gains amid growing optimism that the Federal Reserve will cut interest rates in September.
rose 0.2% to a record high of $2,478.65 per ounce, while the August expiration hit a record high of $2,483.65 per ounce.
Gold supported by interest rate cuts
Gains in gold were mainly driven by increased optimism about interest rate cuts by the Federal Reserve.
Soft consumer price index inflation data and dovish signals from the Fed had traders broadly positioning for a rate cut in September.
Traders saw according to . They also no longer considered the possibility that the Fed would remain on hold.
Fed Chairman Jerome Powell said this week that the Fed was increasingly confident that inflation would continue to decline. He had also previously indicated that the central bank did not need to see inflation reach its 2% target to start cutting interest rates.
Muted retail sales data on Tuesday reinforced the idea that the US economy was cooling, even as the numbers came in slightly higher than expected.
Lower interest rates are a good sign for gold and other precious metals as they imply a lower opportunity cost for investing in the sector.
The dollar fell to its lowest in over a month on the prospect of lower interest rates, further benefiting precious metal prices. Other precious metals also rose following a weaker dollar, rising 0.1% to $1,016.80 an ounce while rising 0.3% to $31.543 an ounce.
