Gold extended its record-settling rally on Tuesday, breaking above the $3,700 mark for the first time ever, as bets continue to pile in for a Federal Reserve rate cut this week.Spot gold hit $3,702.84 per ounce for a new all-time high during the morning trading. It has since retreated to the $3,685 level, but remains above the previous record set on Monday.US gold futures shot up to $3,739.90 per ounce, before experiencing a similar pullback.Click on chart for live prices.The gains were supported by a falling US
dollar, now sitting at lows not seen since July. A potential US rate cut this week, which has largely been priced in by the markets, has also been fueling the rally.In addition to the September cut, traders are also anticipating more rate reductions by the end of the year, as a string of US data gave indications of a weak labour market and no major inflation surprises. This would provide further boosts to gold, which tends to perform well under low-rate environments.“Global growth uncertainty and geopolitical risk continue to keep haven demand high, but the gold rally is being driven largely by anticipation of aggressive rate cuts from the Federal Reserve,” Zain Vawda, analyst at MarketPulse by OANDA, told Reuters.Gold’s hot runBullion has now surged about 41% since the start of the year, outpacing major assets such as the S&P 500 index, and recently surpassed its inflation-adjusted peak reached in 1980.Gold price poised to break out: SprottAnalysts say the rally has been driven by a potent mix of sustained central bank buying, intensifying safe-haven flows and a global shift away from the US
dollar. An increasing investment appetite has led to multiple banks adjusting their bullish forecasts for gold, with UBS recently upgrading its year-end target to $3,800.Earlier this month, Goldman Sachs said prices could even approach $5,000 an ounce if just 1% of privately-held US Treasuries shift to the precious metal.(With files from Reuters)
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