Gold Hits Record High Amid Dollar Weakness and Geopolitical Tensions
Spot gold prices surged to a new record of $2,685.58 per ounce during Thursday’s trading session, driven by a weakening U.S. dollar and escalating geopolitical tensions. Gold closed the day up $15.68, or 0.59%, at $2,672.23 per ounce, marking a continuation of gold’s upward trend.
FXStreet analyst Christian Borjon Valencia attributed gold’s rally to factors including China’s stimulus measures and unrest in the Middle East. Additionally, the U.S. Federal Reserve’s recent 50 basis point rate cut has further fueled bullish sentiment, with investors anticipating more aggressive easing from the Fed.
Gold’s impressive rise—up over 29% year-to-date—has been supported by a combination of safe-haven demand, strong central bank buying, and expectations of lower interest rates. The Fed’s policy rate now stands at 4.75%-5.00%, and traders estimate a 51% chance of another 50 basis point cut in November, which could boost gold’s appeal further, as lower interest rates make non-yielding assets like gold more attractive.
Independent analyst Ross Norman noted, “Gold is now riding a momentum of its own, attracting speculative capital flows.”
Amid the price surge, geopolitical tensions added to market uncertainty. On September 26, the Israeli Prime Minister’s Office denied reports of a ceasefire agreement with Lebanon’s Hezbollah, following earlier calls by the U.S., France, and 12 other countries for a 21-day ceasefire on the Lebanese-Israeli border. Israeli forces have been instructed to continue their military operations, further fueling safe-haven demand for gold.
Market participants are now turning their attention to the release of the U.S. core Personal Consumption Expenditure (PCE) price index for August, scheduled for Friday. This index is the Federal Reserve’s preferred inflation gauge. Analysts expect the PCE report to influence market sentiment and potentially affect gold prices, with weaker-than-expected data likely to pressure the dollar and push gold higher.
Bank of America has indicated that it expects the report to show encouraging signs of falling inflation, aligning with the Fed’s outlook for gradual price stability.
According to Valencia, gold prices may continue to climb, although the rally appears stretched, with the Relative Strength Index (RSI) nearing overbought levels. Should gold break through the $2,685 resistance level, the next targets will be $2,700, $2,750, and eventually $2,800 per ounce.
