New York, July 27 – Gold prices surged on Friday as investors increasingly bet that the Federal Reserve will cut interest rates in September. This development was fueled by the latest inflation data, which indicated that price pressures are gradually easing.
The spot price of the yellow metal rose 0.96% to $2,387.19 per ounce. The August gold futures contract on the Comex division of the New York Mercantile Exchange gained 1.37% to settle at $2,385.70 per ounce.
Why is the price of gold rising?
- Expected interest rate cuts: The decline in US Treasury yields following the release of inflation data signals that investors expect the Fed to ease monetary policy. When interest rates fall, gold, as a non-interest-bearing asset, becomes a more attractive investment.
- Weaker dollar: Lower interest rates typically lead to a weaker domestic currency. A weaker dollar increases the attractiveness of gold for foreign investors as they can buy it more cheaply.
- Inflation hedge: Although US inflation has slowed slightly, gold still retains its reputation as a safe haven during times of uncertainty and inflation.
What do analysts say?
Fawad Razaqzada, an analyst at Forex.com, argues that the latest inflation data paves the way for the Fed to cut interest rates more aggressively this year. This, he believes, could further support gold prices.
What does this mean for investors?
The rise in gold prices could be an opportunity for investors seeking to diversify their portfolios and hedge against inflation. However, investing in gold carries certain risks, and it is important to consult with a financial advisor before making any decisions.
Conclusion
Gold has seen increased investor interest in recent days. Expectations of interest rate cuts and a weaker dollar are supporting the rise in the price of this precious metal. While gold is often considered a safe investment, it is important to remember that its price can be volatile and influenced by various factors.
