Gold reaches new all-time high amid growing expectations of US interest rate cuts this year

Gold reaches a new all-time high driven by a surge in investor demand across the broader metals market amid growing expectations of US interest rate cuts this year.

According to The Edge Singapore, the price of bullion rose by as much as 1.1% to hit US$2,440.59 (S$3,283.48) per ounce during early trading in Asia, surpassing its previous peak set in April.

Recent market activity suggests that traders are increasingly confident that the Federal Reserve might lower borrowing costs as early as September.

The value of the US dollar fell, and US Treasuries rallied last week after data released on May 15 showed that April’s inflation had eased more than anticipated.

This provided additional support for gold, which was priced in US dollars and did not generate interest. A weaker dollar makes gold cheaper for investors using other currencies, enhancing its attractiveness.

According to the latest data from the Commodity Futures Trading Commission, hedge funds trading Comex futures raised their bullish bets on gold to a three-week high in the week ending May 14.

This shows a growing optimism among investors about the metal’s future performance.

Geopolitical tensions have also played a role in driving up demand for gold. In Russia, a Ukrainian drone strike on a small refinery halted operations on Sunday, adding to the existing risks in the region.

Similarly, in the Middle East, a China-bound oil tanker was hit by a Houthi missile in the Red Sea on Saturday.

Such incidents heighten the demand for safe-haven assets like gold as investors seek to protect their wealth amid geopolitical uncertainties.

As of 9:12 am in Singapore, spot gold was trading at US$2,437.48 per ounce, up 0.9%. The Bloomberg Dollar Spot Index remained flat, following a 0.7% decline last week to its weakest level in over a month.

This continued weakness in the dollar is supported by higher gold prices.

Other precious metals also saw gains. Silver, palladium, and platinum all climbed. Silver, in particular, was trading near an 11-year high after a strong rally on Friday.

The surge in silver prices is partly due to positive sentiment spilling over from other physical metals markets, where tightening supply has driven up investor demand.

Unlike gold, silver is also considered an industrial commodity because of its use in products such as solar panels. /TISG

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