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Gold prices are hitting all-time highs as growing optimism about the Federal Reserve's September interest rate cut and a weaker dollar boost demand for the precious metal.
Spot gold prices rose 0.5% to $2,480.75 an ounce on Wednesday afternoon, after hitting an all-time high of $2,482.29 earlier in the session. U.S. gold futures rose 0.7% to $2,485.30.
“The expectation that we are approaching a Fed rate cut, as well as a weaker dollar, are the main factors driving gold higher.”“That's a big part of the story,” said David Meger, director of alternative investments and trading at High Ridge Futures. Other Fed officials say the signals on the inflation front are encouraging, leaving an open window for more rate hikes.
Fed Board Member Christopher Waller said the time is “getting closer” for the U.S. central bank to cut rates, but uncertainty about the economic path makes it hard to know when short-term borrowing costs might ease.Data showed that output at U.S. factories rose more than expected in June, helping fuel a big rebound in production in the second quarter.
There is a 98% chance of a U.S. interest rate cut in September, according to the CME FedWatch Tool. Lower interest rates boost gold prices and hurt the dollar, making gold cheaper for investors holding other currencies.
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