By Joe Hoppe
Gold futures reached a new all-time high overnight as rate-cut hopes grow, U.S. Treasury yields fall and geopolitical tensions mount--and they look set to climb even higher.
August gold futures on the New York Mercantile Exchange recently rose 0.2% to $2,472 a troy ounce, having reached as high as $2,487.4 earlier in the session. The prior all-time record was $2,477 an ounce, set on May 20, before a sharp sell-off followed.
Precious metals are gaining momentum as the market becomes increasingly certain that the end of this quarter will bring the first interest rate cuts from the U.S. Federal Reserve, said Daria Efanova, head of research at Sucden Financial in a note.
Non-interest bearing bullion typically has an inverse relationship with interest rates, with higher rates damping gold's appeal to investors.
"It's probably just a matter of time before we see the yellow metal hit the $2,500 per ounce milestone," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Some profit-taking could kick in at that level, though, given that, at current prices, gold is entering overbought territory, Ozkardeskaya said, adding that it would be healthy to see some minor downside correction.
Gold's ability to find price support despite varying market conditions in the year-to-date is worth highlighting, said Commonwealth Bank of Australia analyst Vivek Dhar.
"While we think gold prices face uncertainty in coming months, we think the uncertainty has a positive skew, raising the risk that gold rises above our forecast of $2,500 an ounce by the end of the year," Dhar said.
Write to Joe Hoppe at joseph.hoppe@wsj.com
(END) Dow Jones Newswires
07-17-24 0432ET
